Malaysians top buyers of London office property

(Reuters) – Malaysian investors are well on their way to being the leading buyers of London offices for the first time in 2012, helped by a deal to buy London’s landmark Battersea Power Station, as the Far East country seeks a safe haven for its burgeoning wealth.

Malaysians bought £1.3 billion (RM6.5 billion) of London property in the seven months to July 24, more than British buyers and beating the US into second place among overseas investors with £793 million, research by property consultant CBRE Group showed.

“Given what we know about how active the Malaysians are in the market, it looks like they will outspend North American investors this year,” CBRE’s head of central London research, Kevin McCauley, told Reuters.

The figures include mixed-use schemes with a large office component like the derelict Battersea site, which was bought by a team including Malaysian developers SP Setia and Sime Darby for £400 million this month.

It would be the first time Malaysian buyers have outspent any other nation since CBRE started keeping records in 1984, a ranking dominated in recent years by US buyers.

With North America and Europe still recovering from the fallout of the global financial crisis, strong economic growth in China and other parts of Asia has created immense wealth in the Far East, mainly fuelled by manufacturing, construction and commodities.

Far East buyers are attracted to London’s property market by the weakness of Sterling and the fact it is a liquid and transparent investment in a relatively stable political environment, often providing better returns than Asia’s more volatile and smaller markets.

Overseas buyers have invested £26.2 billion in London offices since 2010, CBRE said, and foreign ownership of real estate in London’s City financial district stands at 52 per cent, according to Development Securities.

British investors, who were the biggest buyers 20 years ago, have spent £1 billion mainly on smaller, lower quality properties so far this year, CBRE said. The list of top five overseas investors in 2012 is completed by Germany, Brazil and Qatar.

Other Malaysian deals include investment fund Permodalan Nasional Berhad’s acquisition of two office buildings for about £570 million that house the European Bank for Reconstruction and Development and law firm Olswang.

“This is no flash in the pan,” said Simon Barrowcliff, CBRE’s executive director of central London capital markets. “I think the Asians will be at the forefront for the next three to five years.”