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Friday June 15, 2012

Weaker pound spurring Takaful Malaysia to buy London properties

PETALING JAYA: Syarikat Takaful Malaysia Bhd has joined the bandwagon of Malaysian entities snapping up UK properties to take advantage of the weaker pound.

“The company is now close to concluding an overseas investment deal specifically in the UK property market,” it said in a statement.

When it materialises, it will be the company's first overseas property deal.

To this end, the Islamic insurance company, which has assets worth more than RM6bil at group level, is expected to set up a wholly-owned subsidiary in Labuan International Offshore Financial Centre (IOFC) to act as a special-purpose vehicle (SPV) to invest and hold its overseas property investment.

Its move into UK follows the numerous acquisitions that have been made by local institutions such as the Employees Provident Fund (EPF), which has spent at least £600mil (RM2.96bil) buying up properties in UK in recent times.

The EPF now owns some seven properties in UK and may increase this figure soon having recently received a mandate to up its overseas investments.

Permodalan Nasional Bhd (PNB) has also been active in the overseas property market having spent billions in the last two years buying real estate, among which four were commercial properties in London.

More recently, property firms SP Setia Bhd and Sime Darby Bhd emerged as the preferred bidders for the redevelopment of the prestigious Battersea power station project in London.

Takaful Malaysia group managing director Datuk Mohamed Hasan Md Kamil in the statement said: “Depreciation of the British pound and a devalued market are a few of the factors that make investment in London attractive.”

Against the ringgit, the pound has been on a downtrend since the beginning of the year and has remained below the RM5 mark since late last year, reflective of the ongoing economic problems in the European region.

Amid uncertainties in the global markets, cash-rich institutions including asset managers and wealth funds are training their eyes on stable assets such as property.

“And London, very much like New York, is generally perceived as a safe haven' helped by its international financial status,” said Henry Butcher Malaysia director Lim Eng Chong.

He noted that Malaysians, both individual buyers as well as institutions and companies, were fast becoming among the largest group of London property investors alongside the Arabs, Russians as well as those from Singapore and Hong Kong.

“When the £8bil Battersea project takes off, we expect even more Malaysian buyers to move into the property scene in London as we expect Malaysians to be given some form of priority to buy the projects developed on the famous site, given that it will be developed by our local boys, ” Lim said.

He said returns on London property investments, which were steady at between 5% and 7% annually and therefore relatively attractive given that London had one of the lowest borrowing costs around, were also among the factors that were attracting buyers into the market.

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