Since the British pound has lost some of its value compared to other currencies this year, commercial properties in the UK have become more attractive to foreign investors, with some of them making the decision to enter the real estate market.
Syarikat Takaful Malaysia Bhd is the latest in a number of Malaysian companies who are investing in Britain for precisely this reason. The company is expected to establish a wholly-owned subsidiary in the Labuan International Offshore Financial Centre (IOFC) specifically to invest and hold its overseas property investments.
Permodan Nasional Bhd has also been actively buying property in the UK, and has spent billions of pounds on various purchases over the past two years. The company has made four purchases of commercial properties in London during that time.
The value of the British pound has been on a downward slide since the beginning of 2012. During a time of uncertainties in global financial markets, institutions which have cash reserves at their disposal are looking to invest in items like property, which are stable assets. Asset managers and wealth funds are likely to consider this type of investment. London is considered a safe haven by international investors, in part due to its international financial status.
Malaysians are among the largest group of property investors in London. Other major players in the property market at this time include Arabs, Russians, and investors from Hong Kong and Singapore. The number of Malaysian buyers is expected to increase over time as the Battersea project gets underway.
London property investors have seen steady returns of between 5-7 per cent annually, which makes this an attractive option. Given the fact that borrowing costs in London are relatively low, buyers are more likely to add commercial properties in the UK to their investment portfolio.
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