UEM Land Sdn, developer of Malaysia's biggest commercial and housing project, plans to start real estate investment trusts and new property developments as it prepares for a listing this year.
State-controlled UEM Land may also invest overseas from 2010 to emulate CapitaLand Ltd, Southeast Asia's largest property company, Managing Director Wan Abdullah Wan Ibrahim said on Tuesday. The Kuala Lumpur-based company now derives almost all its earnings from the Nusajaya development in the southern state of Johor, according to Bloomberg News.
"We aspire to be something of that size and that diversified," Wan Abdullah said in an interview in Kuala Lumpur, referring to Singapore-based CapitaLand. "We even have initiatives like REITs on the table. We cannot rely on just Nusajaya to be our bread and butter."
UEM Land, controlled by UEM World Bhd, is due to start trading in Kuala Lumpur by September in a reorganization to attract investors to the group's real estate unit. The company wants to cut its reliance on Nusajaya, a 9,712-hectare development backed by the Malaysian government.
Malaysia's ruling coalition, in power since independence in 1957, suffered its worst election losses on March 8. Some analysts raised concern the result may slow state-backed projects such as Nusajaya.
"Investors still fear for some reason that projects may not be deployed as strongly as they would have been," said Vincent Khoo, head of research at Aseambankers Malaysia Bhd in Kuala Lumpur. "There's enough uncertainty on this project."
Shares climb
Shares of UEM World, Malaysia's third-biggest construction company, yesterday climbed 1.8 percent to 3.38 ringgit as of 11:01am in Kuala Lumpur, giving the company a market value of 4.7 billion ringgit (US$1.5 billion), Bloomberg said.
UEM World has dropped 18 percent since the plan to list UEM Land was announced on Feburary 15, and is down 14 percent this year.
Other government-linked stocks including power producer Tenaga Nasional Bhd have declined since the March election.
CapitaLand, controlled by Singapore's sovereign wealth fund, is up 8 percent in 2008 and valued at S$19.1 billion (US$14 billion). Its real estate investment trusts and investments span more than 20 countries, according to the company's Website.
Under the UEM reorganization, investors in UEM World will receive 125 UEM Land shares and 125.8 ringgit in cash for every 100 UEM World shares held.
Wan Abdullah said UEM Land plans to sign an agreement next month to buy a 404,685-hectare plot in Selangor, the state surrounding Kuala Lumpur, for about 110 million ringgit.