Mah Sing Group remains focused on affordable residential properties, while eyeing data centres and industrial market for growth

RECOGNISED as a leading property developer in Malaysia, Mah Sing Group’s track record in new property sales has been impressive.

The group set a higher sales target of at least RM2.5 billion (S$755.5 million) for 2024 and, having already hit RM1.85 billion for the first nine months, is on track to achieve the full-year target, said founder and group managing director, Leong Hoy Kum.

For its last financial year ended Dec 31, 2023, the group achieved new property sales of RM2.3 billion, a 13 per cent increase compared to RM2 billion (excluding land sales of RM115 million) in 2022, and the highest property sales recorded since 2016.

The stellar sales record was driven by high demand in markets in the central and southern regions of Malaysia, and successful launches of its M Series residential projects.

The M Series is a range of affordable housing developments targeting buyers looking to buy a home within their means. It generally offers units of at least 700 square feet in size, with an indicative selling price starting at RM318,000, depending on the location.

This marketing strategy has worked well for the group as it is able to meet the pent-up demand for affordable housing especially for first-home and younger buyers, providing reasonably priced homes with premium features in strategic areas under its “luxury made affordable” branding.

But the developer has historically been focused on the higher-end residential segment, as a “premier lifestyle developer”.

Leong told The Business Times that although the focus now is still on projects under its M Series, there might be a shift in the future to move back to mid-high/high-end homes when market sentiment improves.

“The Malaysian property market is primarily domestically driven, which is less affected by any forex movements or global events such as US post-election policies,” he said.

And things are looking good for the economy. According to the Malaysian Institute of Economic Research, the country’s economic outlook for 2025 appears bright, with a gross domestic product growth rate of between 4.5 per cent and 5.5 per cent.

To encourage first-time home ownership, the government has implemented a tax relief on annual mortgage interest payments, from 2025 to 2027. These are for sales and purchase agreements that are executed from Jan 1, 2025 to Dec 31, 2027, and the property purchased must not be used to generate any income.

This tiered tax relief offers up to RM7,000 for homes that are priced up to RM500,000. For homes that cost between RM500,000 and RM750,000, the tax relief amounts to RM5,000.

Mah Sing will stand to gain from this policy as demand for affordable housing remains strong. About 96 per cent of the group’s residential projects are priced at RM700,000 and below.

The five-year stamp duty waiver for residential properties priced RM500,000 and below for first-time home buyers will also continue to benefit the company until the end of 2025.

Meanwhile, major infrastructure projects in the country may help to boost property demand in areas where the company has a presence, said Leong.

These include the Johor Bahru-Singapore Rapid Transit System (RTS) Link, Johor-Singapore Special Economic Zone (JS-SEZ), MRT Circle Line (MRT3) in Klang Valley, and the Mutiara LRT line in Penang.

Besides residential, the developer is also looking to expand in the industrial sector.

In January, the group added 75 hectares (ha) of land in Sepang, Selangor to its industrial portfolio for RM100.72 million for the development of MSS Business Park.

The business park is currently under planning, and will be launched in early 2025. The first phase is expected to have a development period of three to four years. Mah Sing said this project is targeting industrialists from the high-end manufacturing and value creation manufacturing sector to set up their facilities.

This is in addition to its earlier completion of five industrial parks – Mah Sing Integrated Industrial Park in Mutiara Subang, iParc in Bukit Jelutong, iParc 2 in Shah Alam, iParc 3 in Bukit Jelutong, and iParc@Tanjung Pelepas.

Leong is optimistic that industrial projects will benefit from Malaysia’s chairmanship of the Association of South-east Asian Nations (Asean) next year.

The Malaysian Investment Development Authority said earlier this year that the country is looking to leverage on its Asean chairmanship to “position itself as the region’s premier investment destination, attract greater economic partnerships and showcase its potential to global investors”.

Besides this, Leong also viewed foreign direct investments (FDIs) from the China-Plus-One strategy to benefit the sector, as Chinese companies flock to South-east Asia in search of alternative manufacturing bases. “This increased FDI will boost industry property demand,” he reasoned.

In May this year, the group made its maiden entry into the data centre sector by partnering Bridge Data Centre, a company owned by Bain Capital, in Mah Sing DC Hub @ Southville City in Kuala Lumpur.

A total of 60.7 ha of land with a planned capacity of up to 500 megawatts (MW) has been set aside for data centre expansion. As at October, the partnership with Bridge has resulted in two parcels of land totalling 21.7 ha taken up in the hub, with a planned capacity of up to 300 MW.

Leong said that this collaboration enables the group to diversify beyond its cyclical property development income by building recurring income streams, which helps to strengthen its financial position.

Such partnerships also “utilise the group’s land bank for gains from land sales and potential exit value, enhancing stakeholders’ value” at the same time, he added.

Besides this project, Mah Sing has another 17 ha of land at Meridin East, Johor Bahru, with a 300 MW power capacity. The land parcel is up for sale to data centre players, and could potentially lead to a land sale gain for the company in 2025.

Hong Leong Investment Bank Research estimated the land sale proceeds for this parcel at between RM185 million and RM260 million, assuming a selling price of RM100 to RM140 per square foot.

The group is listed on the Kuala Lumpur Stock Exchange, with its core trade in property development, and non-core businesses in the manufacturing of healthcare gloves and plastic pallets focusing on logistics, warehouse and transport solutions. It has presence in Klang Valley, Johor and Penang in Malaysia.

Asked about its future property development plans, Leong said that any move to other states in Malaysia would proceed “if there is demand potential”.

On whether the group has any plans for the Singapore market, he noted: “Evaluation of overseas projects is an ongoing exercise.” The group would proceed only “if feasibility studies indicate comparable or better returns than local projects”.

For the third quarter ended Sep 30, Mah Sing Group recorded a net profit of RM60.1 million, up 20 per cent from RM50 million in the year-ago period. Revenue was down to RM639.3 million in Q3 2024 from RM644.3 million in the corresponding period in 2023. Earnings per share (EPS) was RM0.0235 during the third quarter compared to RM0.0206 in the year ago period.

For the nine-month period, net profit rose 19.8 per cent to RM180.3 million, from RM150.5 million in 9M 2023. Over the same period, revenue fell 8.1 per cent, from RM1.93 billion in 9M 2023 to RM1.78 billion in 9M 2024 while EPS was RM0.0718 compared to RM0.0620 a year ago.