IOI Properties Turns Formidable In Lion City
Hong Leong Investment Bank Bhd (HLIB) Research has maintained its BUY call on IOI Properties Group Bhd (IOIPG), with an unchanged target price of RM4.05, implying a significant 113.2% capital upside and total expected return of 116.9%. The reaffirmed conviction follows IOIPG’s move to acquire the remaining 50.1% stake in Singapore’s iconic South Beach development for SG$834 million (approximately RM2.75 billion), which will see the group take full control of the landmark mixed-use asset.
The house reported that the deal, which values South Beach at a slight 3% premium to its latest appraised value, is expected to be completed in the second half of calendar year 2025 and will be financed through internal funds and borrowings. While IOIPG’s net gearing is projected to rise from 0.70x to 0.93x post-acquisition, the analyst believes the risks are manageable, underpinned by recurring income streams and supportive interest rate trends in Singapore.
South Beach comprises a Grade A office tower, the 634-room JW Marriott Hotel, 190 luxury residences, and a retail podium. With committed occupancy at 92.4% for the office space and 92.5% for the retail segment, and hotel occupancy at 76% as of 3QFY25, the property is already generating stable cash flows. IOIPG expects to achieve an earnings uplift of RM89.5 million (1.63 sen per share) in FY26 from the acquisition, representing an 8.9% enhancement to the firm’s forecasted earnings.
According to HLIB, the acquisition is also justified by the high institutional demand and scarcity-driven pricing of Singapore’s Grade A office market. Comparable deals, including the sale of Tong Building on Orchard Road, indicate prime office space in Singapore continues to fetch between SG$4,000 and SG$5,000 per sq ft. By valuing only the office component of South Beach at SG$4,250 per sq ft, the implied valuation would already make up nearly 79% of the acquisition cost.
To further strengthen its capital structure, IOIPG is eyeing a REIT listing of its Malaysian investment properties, targeted for 2026 with an estimated valuation of RM6 billion to RM8 billion. Additionally, its W Residences – Marina View project in Singapore is nearing launch, with construction already reaching the 10th floor, pointing to another future revenue stream.
HLIB noted that IOIPG’s acquisition differs from earlier land banking exercises in that South Beach is already operational and income-generating. The favourable shift in Singapore’s interest rate environment — with SORA down 138 basis points since end-June 2024 — also alleviates debt servicing pressures, given that over 80% of IOIPG’s loans are SG$-denominated and floating-rate linked.
With this transaction, IOIPG cements its standing as a major real estate player in Singapore. The move also grants full operational control, potential leasing synergies and an immediate boost to its recurring income. HLIB sees the group’s regional diversification — combining exposure to Singapore’s high-value, resilient real estate and Malaysia’s recovering property sector — as a compelling long-term investment narrative.
Forecasts remain unchanged pending completion of the acquisition.