Rakuten Trade head of equity sales Vincent Lau
PETALING JAYA: The UK property market is navigating a period of uncertainty, with weak house sales offset by growing demand in rental housing, student accommodation and green-certified offices.
For Malaysian developers with exposure to London, this shifting landscape presents both challenges and opportunities that could shape their long-term fortunes.
UK house prices slipped 0.4% year-on-year (y-o-y) in September 2025, the first decline since January 2024, amid market jitters over possible new property taxes. Yet, analysts noted that moderating inflation and falling borrowing costs may lend some stability in the months ahead.
According to Mak Hoy Ken of CIMB Securities, Gamuda Bhd
and IJM Corp Bhd are good mid to long-term plays on build-to-rent (BTR) schemes, purpose-built student accommodation (PBSA) and green offices – three asset classes that are growing despite weakness in the broader UK property market.
Affordability concerns remain a key headwind for home ownership in the United Kingdom, as first-time buyers still face high upfront deposits, even as affordability ratios have improved marginally.
The average home in England costs 7.7 times annual earnings, compared with 8.4 times in 2023, though the ratio is far higher in London at 11.1 times, Mak reported in a post-UK tour report to clients.
As such, he said the result has been a surge of interest in BTR schemes and PBSA. In the first half of 2025 alone, the United Kingdom attracted £2.2bil in BTR investments and £1.6bil in PBSA projects.
As Knight Frank data showed, London’s BTR stock has expanded to nearly 55,000 completed units, with another 16,445 under construction. Meanwhile, rental growth for PBSA in the capital hit 10.2% last year, outpacing the national average of 7.6%.
“The rising popularity of BTR schemes that offer professionally managed rental homes at scale has been a clear response to London’s tight housing stock,” Mak pointed out.
Meanwhile, the analyst said the commercial segment has also bifurcated, as older offices face rising vacancy risks, while prime green-certified buildings in central London are commanding record rents, with average prime rents surging 30% since 2020 to £104 per sq ft.
Mak further said: “75 London Wall and 25 Finsbury Circus will benefit from a ‘flight to quality’ towards sustainability-focused office buildings in London’s city centre, where prime office rents reached £104 per sq ft in the second quarter of 2025 (2Q25) – the highest level on record.”
Looking at specific companies under his coverage, Mak reported that Gamuda has steadily expanded its UK portfolio, focusing on PBSA projects and a flagship London office redevelopment.
The group’s largest project is 75 London Wall, a former Deutsche Bank headquarters in the Square Mile acquired in 2023 for £257mil. Now under redevelopment, the building will offer 688,000 sq ft of green-certified office space upon completion in late-2027.
“Gamuda believes that 75 London Wall will be a standout investment, benefitting from a ‘flight to quality’ towards top-grade offices in London with sustainability features,” said Mak, with the company planning to secure pre-letting commitments at least six months before completion.
Beyond offices, Gamuda is building out a PBSA pipeline. Two projects – Woolwich in London and City Wharf in Glasgow – will deliver 911 beds by September next year.
A third site in Marshgate Lane, in the Stratford area in East London, will add 321 beds by 2028. Gamuda is also eyeing expansion into Bristol, Manchester, and other UK university towns.
Collectively, Mak said Gamuda’s UK projects carry a gross development value (GDV) of RM5.9bil, or about 9% of its remaining global GDV. At the same time, he observed that IJM Corp has emerged as the Malaysian developer with the deepest exposure to the UK market, thanks to strategic partnerships and acquisitions.
Through Innova – a joint venture with Network Rail – IJM has access to prime brownfield sites with a potential GDV of up to £7bil. The venture aligns with the UK government’s plan to unlock surplus railway land to build 40,000 homes by 2035.
“Innova provides IJM the ideal platform to develop mixed-use projects on brownfield land, aligning with the UK government’s push to increase housing supply,” Mak said.
Already active on several fronts, he said IJM owns 25 Finsbury Circus, a Grade II–listed commercial asset undergoing redevelopment. International law firm Simmons & Simmons has pre-leased 62% of the space under a 20-year agreement.
Based on GDV estimates, the analyst is expecting IJM to generate about £198mil in gross development profits from the project.
Elsewhere, Mak said IJM is advancing The Wheat Quarter, a community-focused redevelopment of the historic Shredded Wheat factory site in Hertfordshire.
The scheme includes 811 homes, a 141-unit retirement facility and 150,000 sq ft of mixed-use space.
Through the Innova partnership, IJM is also progressing with 88 Royal Mint Street, a £373mil to £404mil project featuring an aparthotel and 79 residential units.
To bolster execution capacity, IJM bought a 50% stake in UK contractor JRL Group earlier this year. “By welcoming JRL into its fold, IJM will be able to streamline its upcoming pipeline of UK property projects, making them more timely and cost-efficient,” Mak added.
Concurrently, S P Setia Bhd’s flagship UK venture is its 40% stake in the £9bil Battersea Power Station (BPS) redevelopment, alongside Sime Darby Property Bhd and the Employees Provident Fund.
During his visit, Mak noted that retail tenancy at The Power Station (TPS or Phase 2 of the project) had reached 95%, anchored by Apple UK’s 500,000 sq ft office. More than 30 million visitors have flocked to the site since it reopened in October 2022, aided by improved transport links such as the Underground’s Northern Line extension.
In addition, Mak observed that residential sales have also been encouraging, as units at Circus West Village, completed in 2017, have appreciated by about 50% since launch, while prices at The Power Station’s bespoke apartments have risen 20% in just 18 months.
On the flip side, the remaining undeveloped land bank is valued at RM26bil, or 23% of S P Setia’s total GDV, but the development pipeline beyond 2026 remains fluid.
Notably, Mak remarked: “While BPS is entering a new development cycle (bulk of infrastructure capital expenditure already frontloaded) on a stronger footing, we prefer to wait for more tangible details on its upcoming pre-sales or investment plans before turning more constructive on S P Setia’s 40% share in the project.”
Head of equity sales and seasoned analyst at Rakuten Trade Vincent Lau believes the leadership and political scenario in Britain in recent years has not been ideal, which is reflected in the frequent changes of its prime ministers, leaving the country without a strong character to push its interests.
That said, he highlighted that the United Kingdom still holds significant appeal for Malaysians, being not only a tourist and educational hotspot, but also a second home of sorts.
“We see many Malaysians, especially those who can afford it, and our leaders, still eager to send their children for education in Britain, and the country remains a strong leisure destination. The United Kingdom as a whole still holds an appeal for Malaysians,” he said.
Lau told StarBiz that with Malaysian firms such as Gamuda, IJM and S P Setia going into the UK property market strategically, prospects for these companies and their projects look bright.
Of interest, assistant manager of research at iFast Capital Kevin Khaw commented that the global property market has shown a notable divergence in performance post-lockdowns, with super-prime locations continuing to enjoy strong demand.
“However, lower-tier areas are bearing the brunt of weaker consumption patterns. In the case of Gamuda’s 75 London Wall, we believe its prime location and excellent connectivity will continue to attract corporate tenants despite potentially higher rental costs.
“This gives Gamuda strategic flexibility, as well as the choice to retain the property as an investment asset upon completion or divest its stake, with both options likely to be value-accretive,” he said.
In summary, Khaw said this trend is not unique to the United Kingdom, but globally, the slowdown in property markets is largely concentrated in assets located in secondary areas or those with poorer connectivity, while properties in prime locations remain relatively resilient.
At the same time, another property analyst with a foreign brokerage told StarBiz that the UK property market as a whole is facing weak home sales and affordability challenges.
For Malaysian developers, she acknowledged that IJM and Gamuda stand out with the strongest outlook, with the former underpinned by its Innova joint-venture pipeline and secured office leases.
“Gamuda is well positioned in PBSA and prime London offices, offering solid mid to long-term growth despite near-term risks. S P Setia’s Battersea Power Station is a landmark asset, but its remaining land bank poses execution and capital challenges,” she said.
