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Actual capital flowing into Iskandar still low

[ 14-04-2009 ]
Actual capital flowing into Iskandar still low
 
 

ISKANDAR Malaysia in Johor has managed to pull in an impressive RM42.6 billion of investments to date, but actual capital flowing into the region is still quite low, says a local research house.

"In our opinion, actual capital flowing into the area is still quite low, based on the current status of development," Affin Investment Bank said in a note to clients yesterday after a recent visit to Iskandar Malaysia.

This is partly due to delays in some foreign investments as a result of the global financial crisis.

For example, Dubai-based Limitless LLC and Damac Properties LLC, both of which have formed joint ventures with UEM Land, are likely to postpone their waterfront commercial and residential property projects at Puteri Harbour, as the financial crisis has hit Dubai badly, Affin said.

 

The two foreign investors had committed about RM639 million for the landbank. The combined value of their projects is estimated at between RM6 billion and RM7 billion.

Construction work on the Legoland theme park, meanwhile, which is scheduled to be completed in the first quarter of 2012, has yet to begin.

Legoland is confirmed to operate in Iskandar Malaysia with an initial investment of RM750 million.

Affin believes that actual capital will only start flowing into Iskandar Malaysia after major infrastructure works are completed in one to two year's time.

It noted that the ground work for projects such as Medini, EduCity, Puteri Harbour and some private marinas in Nusajaya has already commenced. Property sales in this area, however, have been slow this year.

Despite the slow pace of development, the research firm is taking a "long-term positive view" on Iskandar Malaysia. It thinks the region will initially play a complementary role with Singapore once the integrated casino resorts begin operations in one to two years' time.

Iskandar Malaysia will have spill-over benefit to capture some 25,000 potential workers and visitors to the two resorts.

"However, for the region to emerge as an independent business hub, we believe it will take a much longer period ," it remarked.

For now, Affin sees Iskandar Malaysia as more of an infrastructure/construction play, with possible beneficiaries being only MMC, which operates the Port of Tanjung Pelepas there, and property developer UEM Land.

It has a "sell" call on MMC and does not rate UEM Land.

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/aidr/Article/index_html

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