REDMOND, WASHINGTON – JULY 3: A sign is seen at the Microsoft headquarters on July 3, 2024 in Redmond, Washington.
Shares of Eco World Development—which counts Malaysian tycoon Leong Kok Wah among its biggest shareholders—rallied after selling another plot of land to a unit of Microsoft, solidifying the Kuala Lumpur-listed developer’s relationships with data center operators.
Microsoft Payments earlier this week agreed to purchase a 138.5-acre (560,489 square meters) parcel at Eco World’s business park in the Iskandar region in southern Malaysia’s Johor state for 694 million ringgit ($154 million). The U.S. tech giant aims to construct a data center on the site as part of its $2.2 billion investment commitment to enhance its digital infrastructure in Malaysia over the coming years.
“Microsoft Payments proposed to develop data centers on the land, which would enhance the appeal of Eco World’s business park,” noted Jessica Low, an analyst at MIDF Research in Kuala Lumpur, in a research report released on Tuesday. She upgraded her recommendation on the stock to ‘buy’ from ‘neutral.’
Eco World’s business parks have been attracting major tech companies, with the firm raising over 1.3 billion ringgit last year from the sale of industrial lots to data center operators. Notably, it sold 123 acres of land to Microsoft in Johor in June of the previous year. Two months later, another 57 acres were sold to Princeton Digital Group, backed by Warburg Pincus.
In late afternoon trading in Kuala Lumpur, Eco World shares rose by 3.7% to 1.99 ringgit each, marking a second consecutive day of gains. The stock has also been buoyed by the recent acquisition of full ownership of Paragon Pinnacle, a private developer of a mixed-use residential and commercial project, as well as an integrated business park in Puncak Alam, Selangor, located approximately 30 kilometers southwest of Kuala Lumpur.
Malaysia is currently at the forefront of the data center surge in Southeast Asia, as global technology leaders are attracted to the nation’s abundant supply of affordable land and power. In addition to Microsoft, several international companies like Amazon, Google, and Oracle are expanding their data center activities in Malaysia, driven by the fast-growing needs of AI and cloud computing.
Local developers, including Eco World, are leveraging this digital infrastructure expansion. Beyond selling land to data center operators, Maybank anticipates that Eco World will develop into a data center landlord, creating a new stream of recurring revenue through long-term lease agreements.
“Eco World is actively engaging with data center companies and may finalize 1-2 deals within its business parks in Klang Valley and Johor,” stated Wong Wei Sum, an analyst at Maybank in Kuala Lumpur, in a recent note.
Eco World, known for developing townships, business parks, and high-rise apartments in Malaysia, also has a presence in Melbourne, London, Singapore, and Sydney. Leong, who has served as deputy chairman since 2013, holds a significant proportion of shares in the company. Forbes estimates his net worth to be $340 million.
