KUALA LUMPUR (Dec 9): Property developer UEM Sunrise Bhd (KL:UEMS) could emerge as a dark horse of the industry in 2025, driven by the upcoming launch of its flagship show gallery in Iskandar Puteri and anticipated disclosures on the revised Gerbang Nusajaya master plan.

These developments, along with the impending Johor-Singapore Special Financial Zone (JS-SEZ) incentives, position the developer to capitalise on the momentum, turning its strategic advantages into tangible success after a year of underperformance, according to Maybank Investment Bank (Maybank IB) in a note on Monday.

"The JS-SEZ theme provides a compelling tailwind for UEM Sunrise," the research house added.

The JS-SEZ agreement is expected to be signed in January 2025 after being postponed twice from its initial schedule of September 2024, then December 2024.

UEM Sunrise, a key landowner in Iskandar Malaysia, currently holds 4,783 acres of land bank with a gross development value of RM61 billion in the region, a prime location near Singapore supported by robust infrastructure and a growing commuter population.  

The broader Iskandar Malaysia market has seen heightened activity, with developers acquiring land and landowners such as Tropicana Corp Bhd (KL:TROP) and Crescendo Corp Bhd (KL:CRESNDO) capitalising on demand for data centres by divesting their land banks, Maybank IB noted.

On the Gerbang Nusajaya master plan, while the revised plan emphasises industrial properties, Maybank IB noted that on-ground activities remain limited for now.

"We have yet to see many activities in Gerbang Nusajaya in 2024 but do not discount the possibility of a pickup in activities in 2025," it added.

The research house maintained a “hold” call on UEM Sunrise, with a target price of RM1.05, representing a 7% gain from its current share price of 97.5 sen.   

Maybank IB has downgraded its rating on the property sector, citing the lack of new growth catalysts as it noted that themes such as the JS-SEZ, data centre developments, and corporate exercises aimed at unlocking asset value have already been factored into current valuations.  

All in all, the research house favours S P Setia Bhd (KL:SPSETIA) and Sime Darby Property Bhd (KL:SIMEPROP) as its top picks. It noted that S P Setia is expected to finalise its Tanjung Kupang industrial park joint venture by the first half of 2025.

Meanwhile, Sime Darby Property recently secured a 20-year lease with Google for its Elmina Business Park, while Eco World Development Group Bhd (KL:ECOWLD) is actively pursuing data centre deals in Selangor and Kulai.

For the JS-SEZ, Maybank IB cautioned that much of the optimism has been priced in since the theme gained traction in mid-2023.

"The JS-SEZ’s location will cover an area governed by six authorities in Iskandar Malaysia and Pengerang, suggesting a level playing field for all landowners. As a result, strong track records and capable management will be critical for competitiveness, we believe," it added.