Foreigners eye local buildings

There is strong take up in commercial property

The en bloc sale of Mah Sing Group Bhd’s two commercial buildings in Kuala Lumpur for RM560.6mil to Prompt Symphony Sdn Bhd, a special purpose vehicle set up by Kuwait Finance House and a unit of Singapore-based Autron Corp Ltd, shows strong foreign institutional investor interest in Malaysian commercial property.

The Icon Jalan Tun Razak (East Wing), a 17-storey Grade A office block with net lettable area of 263,435 sq ft, was sold for RM237mil, or RM969 per sq ft, while The Icon Mont’ Kiara with 27 levels of offices and a retail podium totalling 380,510 sq ft, was priced at RM285.4mil, or RM802 per sq ft.

Kuwait Finance House is listed on the Kuwait Stock Exchange (KSE) with assets totalling 6.314 billion dinar as of Dec 31, 2006. Autron is listed on the stock exchanges of Singapore and Australia.

Before this, there had been several major transactions in the country involving foreign investors. Landmark office transactions included Macquarie Global’s purchase of Empire Tower, Crown Princess Hotel and City Square Shopping Centre in Kuala Lumpur for RM680mil, Injaz Mena Investment’s purchase of Menara ING at RM495 per sq ft and Injaz AsiaEquity’s purchase of Kenanga International at RM555 per sq ft.

Kuwait Finance House (M) Bhd (KFH) is also believed to be actively scouting for real estate investment opportunities in Malaysia. In early November, the group said it would team up with Prestige Scale Sdn Bhd to fund the RM577mil en bloc purchase of Glomac Tower in Kuala Lumpur.

The 40-storey Class A office block will be developed by Glomac Al Batha Sdn Bhd, a 51:49 joint venture between Glomac Bhd and Al Batha Group from the United Arab Emirates.

According to Zerin Properties chief executive officer Previn Singhe, foreign property funds, private equity funds and pension funds considered themselves “under exposed” to South-East Asian real estate and were looking to expand their investment exposure.

“Malaysia, with its transparent land and real estate laws, good value proposition and upside potential, stands out as a strong candidate to attract foreign funds. Many foreign investors are attracted to the country as a highly lucrative option for its well-priced property, strong economy for sustainable growth and good yields over the medium- to long-term,” Previn said.

Interest is also picking up for good retail developments, hotels and high-end residential projects, especially luxury condominiums.

International investment in the property sector is expected to grow at unprecedented levels following the Government’s liberalisation of foreign investment committee guidelines for foreign purchasers and the joint public-private sector initiatives to market Malaysia’s real estate globally.

By The Star (by Angie Ng)