Malaysian real estate to expect more joint ventures, mergers and acquisitions

Analysts believe that this is due to limited land in prime locations and high amount of unsold supply 

Double storey luxury terrace homes in Malaysia. Aisyaqilumaranas/Shutterstock

Since Malaysian real estate has a high volume of unsold inventory and limited land in premium locations such as the Klang Valley, analysts told The Malaysian Reserve that the market itself should expect for more joint ventures (JVs) and mergers and acquisitions (M&A) moving forward.

However, they did caution that the negotiations won’t be coming fast because most developers still prefer to stay independent as they are still doing well financially.

Ching Weng Jin, the head of research at Public Investment Bank Bhd, said that the pandemic-impacted economy has made it possible for M&A activity to increase across all sectors, including the property market.

“For developers, it would make sense for a merger provided they are complementary in functioning in different spectrums of the industry so that the cash flows and balance sheet management could be more optimal,” he added.

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“Pricing is always an issue at times like these because both parties will want to maximise their value and that may make it tough for a merger to materialise.”

Victor Wan, the head of research at Inter-Pacific Securities Sdn Bhd, believes that most of the local developers would rather opt to go on a project alone rather than dealing with a corporate exercise.

“Unless there are synergistic benefits, I do not think there will be more M&A between property players as developers have always been relatively independent in their own operations and offerings,” concluded Victor.