ON
friday
OCT 4, 2013
By Rubini Kamalakaran
This
column last week
discussed the upward trend
of Malaysians buying
residences in London. It
concluded from the steady
flowof London property
launches in KL that the
trendwill persist as long as
the exchange rate remains
beneficial. In fact, the
probability of a surge is
feasible. Certainly,
the rise in the number of
local property developers
venturing into Londonwill
encourage an upswing.
The Battersea Power
Station project is a prime
example. It receivedmore
than favourable response
fromMalaysians. Prime
Minister Datuk Najib Tun
Razak announced soon after
the project launch that all
the apartments in
Phase 1 allocated for
Malaysians, had been
taken up. The
development by
Malaysian
Consortium, led by
property developer
SP Setia Berhad,
Sime Darby Bhd
and the Employees
Provident Fund
(EPF), is the biggest
undertaking by a
Malaysian company
in London so far,
arriving at a gross
development
value of £8 billion
(RM38 billion).
Developers’
Interest in
London
Besides the favoured
bucked-up ringgit to
sterling exchange rate, the
appeal of London to a
property developer lies in
its status as a prime real
estate destination. With a
customer base comprising
primarily of buyers
fromMalaysia,
Singapore, Hong
Kong and
increasingly so
China, property
developer Eastern&
Oriental Berhad
(E&O) sees London
as leverage. Datuk
Terry ThamKa
Hon, managing
director of E&O
recounts a 2012
Jones Lang La Salle
report which
revealed “that
buyers from these
markets made up 51
per cent of new
property purchases
in central London
that the broker handled, up
from47 per cent the year
earlier. More recently, a 2013
CB Richard Ellis (CBRE)
report cited that 38 per cent
of demand for London
residential property is
dominated by South
East Asians.”
GivenMalaysia’s colonial
history, general similarities
in the legal system, also
makes London a fairly
friendlymarket to enter for
local property developers.
For E&O, it was a low
risk entry into the
London property
market too, with the
acquiring of Princes
House. As a prime
freehold building,
not only did it
provide an
immediate avenue
for leasing to
generate rental
income, it also
provided a potential
upside by offering
opportunity for
substantial
refurbishment or
conversion. “Most
importantly for us,
Princes House being
a conversion project
means that we can
expect a managed
andmore efficient
turnaround as
opposed to building
something from scratch,”
Datuk Tham expounds.
Making Its Mark
With the Battersea Power
Station one of the fastest
selling developments in
London in recent years
(according to its CEO
Rob Tincknell) and the
subsequent maiden
projects by our local
property developers
similarly receiving positive
response, this suggests
international acceptance.
Prominent local property
developer IJMLandwhich
unveiled its maiden project,
the Royal Mint Gardens – a
2.7 acre mixed development
locatedwithin a few
minutes’ walk to London’s
iconic landmarks such as
Tower Bridge and Tower of
London – reported a
pre-launch take up of 40 per
cent by London buyers. At
the media briefing, Datuk
SoamHeng Choon, CEO
andmanaging director of
IJMLandwas confident of
its success, estimating that
70 per cent would be taken
up by the first launch. The
update from the COO and
CFO of IJMLand, Edward
Chong: “The take-up for
Royal Mint Gardens
exceeded 75% from its
launch in KL and London.”
The mixed development
project
worth
£300
million
(RM1.5 billion) includes a
five-star hotel, apartments
and retail space.
An observationmade by
a financial daily on launches
byMalaysian developers in
London reported that these
“come withmore integrated
offerings.” Battersea
comprises of apartments,
boutique retail space,
offices, hotels, theatres and
restaurants. Princes House
has successfully obtained
planning permission from
the authorities to convert
the property to commercial
and residential use. It will
comprise 34 units of E&O
branded serviced
apartments and 20
residential units.
“Properties inMalaysia,
developed by our very own
local developers, are
well-sought after by
discerning foreign buyers.
As they venture into
markets like London,
Malaysian property
developers bring with them
their expertise and
experience in delivering
top-notch properties of a
wide scale, fromboutique to
medium and even large-
scale master planned
developments,” shares
Datuk Tham. It is also
evident that Malaysia is
contributing to the economy
inmore ways than one.
WhenMalaysian developers
enter London, they take
their customer base with
them. In the case of E&O,
their existing clientele of
high-net worth individuals
come from across the globe.
These include top buyer
markets like China,
Singapore andHong Kong,
not forgettingMalaysia.
More To Come
Other than the property
developers mentioned
above, Amcorp Properties
Bhd, Oriental Holdings
Bhd, as well as privately-
owned AlloyMtd Group also
has invested in property
projects in London.
AlloyMtd Group acquired
One Crown Place located in
a borough in London called
Hackney. It has received all
concessions for a
24-storey office tower,
a hotel and retail space.
Datuk Soam also indicated
that IJMLand have
been approached for
“joint ventures from a
fewLondon parties for
mix development
projects.” Andword has
it that SP Setia is among
other property players
looking at additional
opportunities to expand
in London. Conclusively,
the success of these
maiden projects will
pave the way for more
ventures in London.
ondon
calling
>Malaysianproperty
developers leave theirmark on
London city’s landscape
Battersea Power Station Redevelopment
Phase 1 of Royal Mint Gardens
New York
Prime
$2,000 - $3,000
Super Prime
$3,000 - $4,500
London
Prime
$2,300 - $3,800
Super Prime
$4,660 - $8,600
Hong Kong
Prime
$4,300
Super Prime
$8,600
Tokyo, Japan
Prime
$2,000
Super Prime
$3,000
Sydney, Australia
Prime
$1,400
Super Prime
$2,300
Singapore
Prime
$2,200
Super Prime
$3,100
Monaco, France
Prime
$4,600 - $4,300
Super Prime
$7,000
Paris, France
Prime
$900 - $1,400
Super Prime
$1,800 - $4,600
Los Angeles, USA
Prime
$1,500 - $2,500
Super Prime
$2,500 - $4,500
London prime residential prices among the highest in the world
Foreign buyers mainly from ASEAN,
Middle East & Russia
Russia
Africa
Indian Subcontinent
UK
Europe
Middle East
South East Asia
other
38
%
13
%
21
%
3
%
2
%
4
%
4
%
15
%
Princes House
Source: Information box, map and pie-chart received from E&O.
Why buy London property?
X
X
Safe haven as London remains a global
financial centre and education hub.
X
X
Favourable exchange rate as the British
pound has depreciated 28% against the
USD from its peak, but is expected to
strengthen as it gradually replaces the
Euro as reserve currency.
X
X
Favourable demand-supply dynamics:
housing supply is still 1/3 below target
with rising population and need.
X
X
Strong rental market (4-5% yield)
supported by rising private rental sector
(12.5% growth over last two years to
25% of London households). UK banks
are still strict with lending (but starting to
ease), so locals have no choice but to
rent. First-time buyers are also being
priced-out with rising property prices.
X
X
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