UK property services firm Jones Lang LaSalle has released a report stating that Malaysian investors are accounting for a larger share of commercial property investment in the country.
Approximately 10 per cent of commercial property transactions in London in 2012 have been made by investors from Malaysia, which has resulted in approximately £30 billion in spending by foreign investors.
The trend of Malaysian investors taking the lead in buying London offices started in July 2012 with the deal to buy the Battersea Power Station. Another important development in this trend was the Permodalan National Berhad’s decision to invest £570 million in two office buildings.
According to CBRE Group, Malaysian investors also bought £1.3 billion worth of London property in the period leading up to July 24, 2012. This level of spending meant they overtook US and British buyers in investment spending.
Malaysian developers SP Setia and Sime Darby spent £400 million to purchase the Battersea Power Station Site. A number of Malaysian investors, including the Employees Provident Fund, have plans for a redevelopment project with a budget of £8 billion.
Investors are actively searching for an alternative that will provide higher yields than the bond market, and London real estate can provide a higher rate of return at present. Malaysian domestic pension funds are currently performing well, but the country’s own stock and bond funds can’t offer a large enough market to accommodate them. Investors are being forced to consider larger markets when looking for a good return on their investments.
A total of £26.2 billion in funds has been invested in the London market by overseas investors since 2010, according to CBRE. Development Securities state that 52 per cent of properties in London’s financial district are under foreign ownership. These investors are focused on acquiring prime properties and avoiding risk.
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