KUALA LUMPUR (Apr 14): Maybank IB Research has maintained its “Neutral” rating on the propery sector and said demand slowdown was more evident in Iskandar Malaysia (IM), and competition was increasingly stiff.

In a note today, the research house said property transactions in Johor had plummeted 33% q-o-q in 4Q14, underperforming the country (-7%) and other major cities/states such as Kuala Lumpur (-12%), Selangor (+2%) and Penang (+8%).

“At the same time, Johor property prices have weakened 1% q-o-q versus Malaysia’s -0.2%, KL’s -0.9%, Selangor’s -0.1% and Penang’s -0.3%,” it said.

The research house said developers from China had been aggressively accumulating land bank in IM.

It said Shanghai-based developer Greenland Holdings Group recently acquired 128 acres of freehold land in the south of Bandar Baru Permas Jaya while Country Garden had received the green light from the Department of Environment to continue its massive reclamation of 3,425 acres of the Forest City project near the second link.

Maybank IB Researh said Malaysian developers had scaled back their launches/shifted their product mix to avoid direct competition with the Chinese developers.

It said the former’s sales expectations for their IM projects had also been lowered.

“Judging from the number of approved high-rise projects, the Iskandar property market could be hit by too much supply of high-rise mixed development projects if there is still no coordinated planning and control; this will induce price volatility.

“The oversupply situation will be exacerbated by the huge incoming supply in 2015/2016 where units under construction have risen 18% y-o-y in 2012 and 2013,” it said.

The research house said it remains cautious on property exposure in IM and prefers developers with exposure in the Klang Valley and Penang.

“Among the stocks under our coverage, UEM Sunrise Bhd and Sunway Bhd have the largest exposure to IM at 88% and 57% of their total GDVs respectively,” it said.