Developing iconic and integrated property development

Developing iconic and integrated property development
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MALAYSIA should put on its thinking cap to attract surplus funds in the global real estate investment market to its shores.

Property developer Datuk C. K. Wong said real estate was evolving into a global asset class, and worldwide real estate investment transactions had hit a record high of US$600bil last year.

“A report by DTZ's Money Into Property said that there was US$2.4 trillion to be invested in real estate worldwide. We should not missed out on the opportunity to be on the radar screen of these property and institution funds,” he told StarBiz.

Wong has called the Government to work closely with property developers to support and promote the development of iconic and integrated property projects with thematic focus “that not only lend prestige to the country but will bring-in more tourist income.”

Sp Setia Bhd's MD Tan Sri Liew Kee Sin
“Fund managers worldwide are receiving record fund inflows as populations in developed countries' approach retirement age.

“With many of these funds attracted by real estate’s strong stable returns, there has been a significant re-weighting on investment portfolios favouring real estate assets, such as, real estate investment trusts and other property backed securities,” he said.

The greatest impact of the growing globalisation of real estate investment can be seen especially in developing markets where the majority of prime quality stocks and real estate have been bought by inter-regional investors.

“Malaysia has the attributes of an international real estate destination. It is regarded as an attractive destination to work and live compared with other Asian cities such as Seoul, Tokyo, Hong Kong, Osaka and Singapore where the cost of living is very much higher.

“Property prices have grown steadily in the past two years – approximately 7% a year, with rental yields remaining extremely attractive – fluctuating 7% to 9% and higher.”

The Jones Lang LaSalle global real estate capital report recently said direct commercial real estate investment in Asia Pacific was US$43bil in the first half of 2006, up 40% from the same period in 2005.

Cross-border investment represented 29% of total investment, up from 28% in the first half of 2005, while inter-regional investment reached 18% of total investment (up from 15% in H1 2005).

Japan accounted for 51% of total Asia Pacific transaction, with a further 40% taking place in four major markets: Australia (12%), China (11%), Hong Kong (10%) and Singapore (7%).

According to Wong, three broad factors - rapid economic growth, changing demographics in both the developed and developing countries, and the phenomenon of off-shoring - have come together and give rise to global real estate opportunities, particularly in the emerging economies.

The United States investors have deepen their exposure to real estate investment in Europe and Asia, while Middle Eastern investors continued to make significant net investments in Europe, the Americas, and Asia.

Large investments remained to be made in the Americas by Asia Pacific funds, that were predominantly from Australia.

SP Setia Bhd group managing director Tan Sri Liew Kee Sin said, Malaysia had lagged its Asian counterparts in grabbing a share of the regional real estate boom.

“This is because we have failed to communicate a compelling brand as a country despite that we have so much to offer. Ease of transaction and potential capital appreciation are paramount to foreigners.

“Well coordinated and concerted efforts to brand Malaysia into a liveable and sustainable destination with a world-class maintenance culture bode well for our ambitions to garner global attention,” Liew said.