IOIProp to cash in on Johor landbank
IOI Properties Group Bhd (IOIProp) is poised for long-term growth, supported by the recent improvement in relations between Johor and Singapore.
The recent announcement of the Johor-Singapore Special Economic Zone (JS-SEZ) and the rapid transit system link (RTS Link) project are tangible signs of warming relations that have been buzzing in the news recently.
IOIProp, majority-owned by the late Tan Sri Lee Shin Cheng’s family through Vertical Capacity Sdn Bhd, now sees his two sons –Datuk Lee Yeow Chor and Lee Yeow Seng – continuing his legacy.
Yeow Seng serves as IOIProp’s group chief executive officer (CEO), while Yeow Chor is the group managing director and CEO at palm oil plantations firm IOI Corp Bhd.
Land potential
IOIProp has 5,065 acres of remaining landbank in Johor, more than half of which is located in the Kulai district, acquired in the late 1980s, according to its presentation deck.
“We were lucky to have acquired much of this land here so many years ago. They were originally estate land.
“Today, we would like to progressively monetise them. IOIProp has been an active player here for a long time,” says Lim Beng Yeang, its chief operating officer for property development in the southern region, during a media familiarisation trip to Johor recently.
Currently, the group has several ongoing property developments across three districts in the southern state – Kulai, Kempas and Segamat – with a total gross development value (GDV) of approximately RM14.5bil, mostly freehold.
Despite ongoing trade wars and the US tariff threats, the group does not foresee significant impact on its operations, at least for now.
“The value of these GDVs could rise in the longer term, especially due to the closer relations with Singapore being the main catalyst now.
“The currency exchange difference between the ringgit and the Singapore dollar, coupled with the potential easing of travel between Johor and Singapore, is seen to have a strong spillover effect in the state,” Lim says.
“I believe people are excited about the potential, especially with the RTS Link, which is a viable proposition set to meaningfully cut down transit times between Johor Baru (JB) and Singapore,” he adds.
Lim points out that another key catalyst for growth is the upcoming electric train service or ETS, which will complete the entire North-South double-track line, with the Gemas-JB connection slated for completion later this year.
“Also, there are plans now to build either a light rail transit (LRT) or a tram-bus network in JB and its neighbouring districts. All these provide a viable incentive for people to live in JB and work in Singapore,” Lim says.
At its Kulai properties, IOIProp is particularly excited about the potential, and has already launched RM10.5bil in GDV.
Its development at Bandar Putra Kulai is just a 10-minute drive from the JB Senai International Airport.
Additionally, about 1,100 acres of its Kulai landbank has been re-zoned for industrial use.
“The industrial land here can potentially bring in companies that will help support the Kulai township with industries and better-paying jobs.
“We can still opt to expand this to have a bigger industrial zone,” Lim says.
Industrial development
IOIProp’s Kulai precinct’s general manager Kelvin Tang reveals that the group has the option to extend and rezone its landbank to up to 2,300 acres for industrial use.
“The location is very good for industries since it is next to the high-tension electric cables. The cost to link to the power grid is cheaper,” he says.
Tang claims that he has received a lot of inquiries about the land, especially after the JS-SEZ agreement.
“We’ve received inquiries from companies in various sectors, including food and beverage, vaccines, electrical and electronics, electric vehicles (EVs), EV batteries and data centres,” Tang says.
Lim further highlights that this industrial and commercial demand, along with the nearby airport, will boost the attractiveness of IOIProp’s offerings, particularly for companies looking to transport high-value goods.
He anticipates the industrial land in Johor to increase the state’s sales contribution from 5% to 15% in the near term.
Currently, Johor accounts for about 30% of the group’s total sales, excluding industrial land sales.
“We’re still receiving enquiries for these industrial land parcels despite the ongoing trade war.
“Companies are potentially looking here not solely due to the trade war, but as part of their China+1 strategy to diversify their production lines outside of China in order to secure customer orders,” Tang says.
He adds that rising operating costs in China are also a factor.
Additionally, IOIProp has launched some RM3.3bil of GDV at its Kempas landbank that's expected to last 21 years.
The Kempas district is located north of JB, about 16km from the Sultan Iskandar Customs, Immigration and Quarantine, near the Singapore border.
The group has also launched RM0.7bil of GDV in Segamat, which is projected to last for around 30 years.