UEM in talks to sell Iskandar sites to investors

SINGAPORE (BLOOMBERG) - UEM Sunrise Bhd, the biggest landowner in Malaysia's southern Iskandar region, is in talks to sell sites to overseas manufacturers to boost economic activity in the area.

Companies from South Korea, Japan and Taiwan are in discussions about investment in the Iskandar zone, said Mr Izzaddin Idris, chief executive officer at the developer's parent, UEM Group Bhd.

These investments, which would help the region attract the right mix of industries and tenants, could be announced as early as the first quarter, Mr Izzaddin said, speaking in Singapore on Wednesday (Nov 2).

"Industries are the mother bee, they will create ancillary spin-off supporting industries, so that will bring a demand for the houses we are building," Mr Izzaddin said in an interview on the sidelines of the Bloomberg Nation Builders' conference. "When we sell land bank, we are forgoing future development profits. But we are focusing on trying to bring industries to the region."

Iskandar, a development zone spanning 2,217 square kilometres, three times the size of Singapore, was started in 2006 to draw manufacturing and logistics companies. UEM Sunrise is trying to attract businesses into the area to create jobs as Malaysian developers are grappling with slowing demand and a glut of apartments in Iskandar after Chinese developers flooded the market with large projects.

UEM Sunrise, Malaysia's fourth biggest developer by market value, is the flagship property company of UEM Group and its parent Khazanah Nasional Bhd., Malaysia's state-owned investment firm.

Shares of UEM Sunrise have fallen 2.7 per cent this year, compared with a 1.9 per cent decline in the benchmark FTSE Bursa Malaysia KLCI Index.

UEM Sunrise agreed in June to sell a 10.2ha plot in Iskandar to South Korea's Amorepacific Corp, which will invest about US$170 million (S$235.3 million) to develop an integrated centre for research and development, manufacturing and logistics of its cosmetics products. This facility is expected to create as many as 500 new jobs in Iskandar.