Malaysian property investors at risk in the UK

london1

LONDON: Malaysian property companies which have a lot riding on London’s real estate market are finding the ground somewhat wobbly following Brexit.

Many of them, just as other Asian investors in the United Kingdom’s property market, are taking a hit following the decision of the majority of the British to quit the European Union.

Major Malaysian players in London include SP Setia Bhd, Sime Darby Bhd, Eco World Development Group Bhd and E&O. Local funds such as Lembaga Tabung Haji, Retirement Fund Inc (KWAP) and the Employees Provident Fund also have investments in the UK property market, as have some wealthy Malaysian individuals.

According to a Bloomberg report, SP Setia Berhad shares have lost 9.5 per cent since Brexit.

Property developer SP Setia Bhd, Sime Darby and the Malaysian Government, through the Employees Provident Fund, have invested USD10.75 billion in redeveloping the historic Battersea power station as the centrepiece of a new master-planned district in London.

About 85 per cent of the Battersea development has been sold and according to SP Setia’s filing at Bursa Malaysia, the project will add 1661 residential units to the city.

The Malaysian Reserve had earlier quoted RHB Research as saying SP Setia could not rely on the United Kingdom to drive its new sales following Brexit. It pointed out that about 4.2 per cent of the firms debts were denominated in pounds.

The Malaysian Reserve report said E&O had cancelled its plan to list its UK assets on the London Stock Exchange due to concerns over the impact of Brexit.

According to the Bloomberg report, shares of companies from other Asian countries which have invested in the UK are also feeling the effect.

Shares in China’s Dalian Wanda Commercial Properties Company Ltd, which is building homes in London’s Nine Elms district, have fallen 7.2 per cent in Hong Kong since June 23.

The report said the shares of China’s largest developer China Vanke Co, whose shares started trading in Shenzhen on July 4 after being halted for more than six months, plunged almost 20 per cent this week amid a tussle for control with shareholders.

Commercial property values could fall about 10 per cent over the next year, led by declines in oversupplied central London, BlackRock Inc. said after the vote.

Investors from Asia accounted for 12 per cent of the USD13.9 billion of direct real estate investment in the UK in the first quarter, making them the largest international group, according to Jones Lang LaSalle Inc.

“It’s a confidence crisis,” Bloomberg quoted Reid Mackay, Singapore-based managing director of EastGate Asia Pte, a real estate brokerage and advisory firm, as saying. “It will very much affect transactions that are pending.”

Deals that are pending “are virtually put on hold. The transactions volume will probably fall,” said Mackay, who previously was executive director of Asia Capital Markets at CBRE Group Inc for 15 years.