November 4, 2013 / 11:07 AM / 6 years ago

UPDATE 1-Malaysia's Iskandar Waterfront delays IPO on gov't property steps -sources

* Postpones listing to Q4 2014, a year later than initially planned

* Concerned measures to rein in property prices will slow demand

* Not immediately clear if delay will impact Johor metropolis development (Adds details of Johor development, analyst comment, sector context)

KUALA LUMPUR, Nov 4 (Reuters) - Iskandar Waterfront, tasked with developing a Malaysian city to rival neighbouring Singapore, has postponed a $300 million IPO on concerns that measures to rein in property prices would slow demand from well-heeled foreigners, two sources told Reuters.

Iskandar Waterfront, part-owned by the Malaysian government in the southern Johor state, is raising funds to develop a waterfront that faces Singapore and comes complete with upscale apartments, malls and a marina.

But it is concerned property sales will slow after the government announced it late October that it will raise real property gains tax next year and double the minimum price at which foreign investors can buy property.

The company will now conduct an initial public offering in the fourth quarter of next year rather than the first, betting on a more upbeat capital market to attract investors, the people said.

“With the new cooling measures, they (Iskandar Waterfront) want to wait and see how it impacts the sales,” one of the sources told Reuters.

This is the second time Iskandar Waterfront has delayed its IPO. It originally planned to list in the current quarter but delayed as it needed more time to value its assets.

It is not immediately clear if the delay in the IPO will affect the development plans.

Iskandar Waterfront could not be immediately reached for comment.

PROPERTY PRICES

Property prices have risen about a third in the past three years, with even steeper rises in hot spots such as parts of Johor state where Iskandar Waterfront is based.

“By imposing a few cooling measures at one go, we think the property market will be hard hit, as we expect speculators to hold back amid stricter mortgage lending by banks,” Wong Wei Sum, analyst with Kuala Lumpur-based Maybank IB Research, wrote in a note to clients on Oct. 28.

The research house downgraded its rating on the sector to “underweight” and on developers UEM Sunrise and Sunway to “sell.”

Iskandar Waterfront, whose units include locally listed developer Tebrau Teguh Bhd, is the developer of 1,620 hectares of waterfront land in Johor state’s Iskandar region, a development spearheaded by state investment arm Khazanah Nasional Bhd.

A successful IPO will see Iskandar Waterfront join a handful of large listed developers in Asia, such as the Philippines’ Ayala Corp and Japan’s Mitsubishi Estate Co Ltd , which typically develop a region and have a number of property companies in their stable.

CIMB, Deutsche Bank, JP Morgan and RHB Investment Banks are involved in the IPO. (Reporting by Yantoultra Ngui; Editing by Niluksi Koswanage and Christopher Cushing)

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