What happens now to Malaysian property investments in London after Brexit?
What happens now to Malaysian property investments in London after Brexit?
No turning back for the UK’s Malaysian investors
Malaysian real estate players are confident they won’t be losing out as a result of the UK’s Brexit vote, despite widespread caution as a result of the devaluation of the pound.
Several Malaysian companies are forging ahead with property investments in London.
In a statement, Sime Darby Bhd insisted that the referendum won’t affect the prospects of its Battersea project in the British capital.
“We are confident the iconic development will continue to generate interest in the longer term,” the company stated.
Indeed, the weakened pound has been the reason for a predicted “buying spree” for Malaysian investors, although long-term prospects at this stage are unknown.
The Malaysian palm oil producer has partnered with property developer SP Setia Bhd and the Malaysian government, through the Employees Provident Fund, to invest USD10.75 billion in redeveloping the historic Battersea power station as the centrepiece of a new master-planned district in London.
According to SP Setia’s filing at Bursa Malaysia, the project will add 1,661 units to the city’s residential supply. Around 85 percent of the Battersea development have already been sold, the filing also showed.
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On the other hand, Eastern & Oriental Bhd (E&O) announced that they are maintaining a “flexible and agile stance” in spite of the market changes that have arisen from Brexit. This year, it will follow through the final stages of converting Prince House, the London office building it acquired in 2012 for MYR330.4 million (USD81.8 million), into a residential complex.
Analysts predict that profits from such projects may suffer after conversion to Malaysian ringgit. The sterling has been underperforming following news of the Leave campaign’s victory, which pushed the currency to its steepest one-day fall yet.
The IMF expects the UK to slide into recession next year as a result of its dissociation from EU.
Malaysia is relatively unfazed by Brexit insofar as trade is concerned. The UK now accounts for only 1.2 percent of Malaysia’s total exports.
Malaysia’s imperviousness to Brexit’s repercussions is based on the assumption that it won’t lead to a contagion among EU members. Malaysia currently has strong trading ties to the Netherlands and Germany.
Due to a property slump, portfolio capital outflows of more than MYR1 billion (USD247.6 million) have been detected from Malaysia in the last two months or so, Astro Awani reported.
Read next: 4 things to know about the current state of Malaysian real estate
Source: Property Report