The proportion of overseas investment in the London commercial property market has been a topic of discussion over recent years. Big players in particular are the Middle East and Southeast Asia.
Much of this investment is state-backed and reflects the prospering economies of these regions. Taking just one country – Malaysia – as an example, we can see that the funds with stakes in London property – largely offices in London – are pension funds, the Moslem pilgrims’ fund Tabung Haji, the Employees Provident Fund and Malaysia’s largest state-owned asset manager Permodalan Nasional Berhad.
A clue to the interest in UK property has been noted by Jones Lang LaSalle, which has compiled data on Southeast Asian investment. Buildings with secure tenants who occupy at least half the space are popular, as they represent less risk and require less management.
It has also been indicated that Malaysian investors are exercising caution in investing in their own property market due to the potential for oversupply and consequent reduction in rents. London, on the other hand, for the time being at least, offers the reverse, with demand outstripping supply. In addition, London offices offer longer leases of five years or more, whereas in Malaysia it is more common to sign a three-year lease. From an investor’s point of view, London wins.
Ahmed Al-Ansari, Media Manager at Morgan Pryce, comments: “This trend seems set to continue and can only bolster the London property market’s economy. If circumstances change back in Malaysia, the country’s investment in the UK may decline, but for the time being the country is a significant player in London.”
Also noticeable are the periods in which the Malaysian currency is strong in comparison to the pound. At these times Malaysian investment has increased and this may occur again in the future, depending on the performance of sterling.
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.
