KUALA LUMPUR, Aug 12 ― A string of Malaysian property launches in London this year is boosting the local property industry, with research house AmResearch Sdn Bhd predicting the sector to beat market expectations as a result.
This follows the in-demand £8 billion (RM40 billion) Battersea Power Station refurbishment project by the joint-venture consortium of SP Setia Bhd, Sime Darby Bhd, and the Employees Provident Fund (EPF) officially launched in July.
“The upward movement in prime London property market prices bodes well for select Malaysian property developers with exposure to this region,” said an AmResearch stock report recently.
AmResearch noted that Phase 2 of the Battersea project is already in pipeline as nearly 97 per cent of Phase 1 has been snapped since its debut launch in January.
Another property developer expected to reap rewards from the London property boom was IJM Land Bhd, which is expected to launch its maiden project in the British by the end of the year.
The project, worth £300 million (RM1.5 billion) in gross development value, will include a five-star hotel and apartments near Royal Mint St, which offers a view of the iconic Tower Bridge.
IJM Land CEO and managing director Datuk Soam Heng Choon was quoted in local daily The Sun as saying that its residential properties will be priced between £1,000 and £1,300 per square feet.
Property and hospitality firm Eastern & Oriental Bhd (E&O) meanwhile has bought Princes House, a prime freehold office-cum-retail building in central London for £20.25 million (RM100 million) in April last year.
“We have since successfully obtained planning permission from the authorities to convert the property to commercial and residential use,” director of group corporate strategy Lyn Chai told The Malay Mail Online.
“Our target is to launch these E&O branded serviced apartments and residential units at Princes House in late 2013.”
E&O expected a ready sale and rental from students, banking on Princes House’s proximity to the University of London, London School of Economics, and the Inns of Court.
Both IJM and E&O’s shares were rated “Buy” by AmResearch in its research note, alongside Mah Sing Group and UEM Land Holdings Bhd.
“Against a relative lack of new supply over the last two decades, incremental demand for prime London spaces has received an added kick from the rising influx of foreign buyers,” said AmResearch.
House prices in central London have risen by annual by 7.9 per cent on average, according to a survey by LSL Property Services Plc and Academetrics.
A separate piece by British newspaper The Guardian reported the National Housing Federation as saying house prices in England will go up by 42 per cent by 2020 while rentals are set to climb even further.
A recent Financial Times (FT) article quoted a survey by property group Knight Frank as saying foreign buyers accounted for nearly three-quarters of new home purchases in inner London, with only 27 per cent of buyers coming from the UK itself.
Together with Asian investors from Singapore, Hong Kong and China, Malaysians accounted for more than half of the purchases.
Last month, the FT also reported that government-backed funds of Malaysia, Singapore and Korea are at the forefront of a new wave of investment in London’s booming property market.
Asian and Middle Eastern money accounted for 82 per cent of commercial transactions in London in the first half of the year.
While launching the Battersea project in July, Prime Minister Datuk Seri Najib Razak told the FT that Malaysia would continue to gobble up London property as cash-rich funds such as the Employees Provident Fund “need to take some of that surplus abroad”.
Najib also told the British newspaper that Malaysia aimed to be a “major player” in the London property market.
The FT reported that spending by Asian investors accelerated rapidly during the three months to the end of June, with the region responsible for £1.04 billion during the first quarter, up 166 per cent on the previous three months.
