SC’s new policies will spawn niche property players
11/02/2008 The Edge Daily By Chong Jin Hun

KUALA LUMPUR: The Securities Commission’s (SC) recent easing of listing requirements for property firms is expected to encourage the creation of more small scale, high-end niche developers within Malaysia’s property hotspots.

Real estate experts said niche property players would be attracted by the accomodative policies to go public with a view to benefitting from the flexibility of fund raising in the capital market.

“They could also enable developers with land that are deemed less attractive to float shares as a means to unlock the value of their tracts,” Real Estate and Housing Developers’ Association (Rehda) president Ng Seing Liong told The Edge Financial Daily.

“We expect the emergence of more small, niche and quality developers in the city area. It is easier to get financing,” he said. Rehda represents some 1,000 property developers in Peninsular Malaysia.

The SC, in a series of liberalisation measures announced recently to attract more local and foreign firms to list on Bursa Malaysia, has allowed private developers to be listed on the exchange without fulfilling the minimum 500-acre (20ha) landbank requirement.

The regulator had also subjected companies with foreign-based assets and operations to similar listing criteria as those with domestic operations, and removed mandatory requirements for the submission of financial forecasts, except for those facing financial constraints.

The SC said on Jan 31 that the new, revised guidelines was part of its efforts to create a more competitive capital market environment through the liberalisation of fund-raising requirements and raising the standards of advisory and due diligence conduct by market intermediaries.

The new guidelines took effect on Feb 1.

Meanwhile, TA Securities analyst Kamarulzaman Hassan said: “Companies with small pieces of less attractive land can cash out by listing their companies. More high-end developers would emerge as a result of the liberalised listing policies.”

A property consultant who requested anonymity said the SC’s new rulings had given developers aspiring to go public more flexibility, as they could focus their financial resources on securing quality land, albeit in smaller portions to pursue market-driven projects.

“It is pointless for a developer to get a low quality 1,000-acre site just for the sake of getting listed.

“Everyone is looking for quality projects in urban areas with high population density, and good infrastructure,” he said.

The Klang Valley, Johor and Penang are deemed Malaysia’s property hotspots due to their respective economic significance to the nation’s economy.