Real Capital Analytics data show Malaysian investors spending more than $1bn overseas on average over the past five years, with sovereign funds, pension funds and developers active.

The biggest spender has been the sovereign Employees Provident Fund, which is placed 40th in PERE magazine’s Global Investor 50 ranking for 2019. EPF has $10.2bn of real estate assets under management and a 4.8% allocation to the sector, according to PERE.

EPF has made a wide range of investments, the best known being its commitment to develop Battersea Power Station in London, which it invested into alongside Malaysian developers Sime Darby and SP Setia. Earlier this year a restructuring of the ownership of the commercial assets of the long-term redevelopment project brought in Permodalan Nasional Bhd (PNB), one of the largest asset management companies in Malaysia, as a shareholder.

As well as direct investments, EPF has been an active investor in funds: in July, it committed A$100m to the Healthcare Wholesale Property Fund, managed by Australian group Dexus.

Khazanah, another Malaysian sovereign fund, has been selling assets of late. In July its joint venture company with Singapore’s Temasek sold the office and retail units of its Duo property development in Singapore to Allianz Real Estate and Gaw Capital Partners for S$1.575bn ($1.15bn). Following that deal the JV sold the Andaz hotel element of the Duo development to Singapore’s Hoi Hup Realty for S$475m ($346m).

In October, $37bn fund Khazanah announced plans to quadruple its foreign investments to 60-70% of total assets, in order to reduce its exposure to domestic risks. These plans form part of a restructuring initiated in 2018 by Malaysia’s new government, aimed at improving long term performance.

“Malaysia’s leading institutional investors have been gaining experience and invested wisely in global markets for several years now,” says Nabeel Hussain, senior director at Savills Malaysia. “While the early focus areas were office assets, primarily in the UK and Australia, this has now grown to include other European and Asian markets, and into sectors such as retail, logistics and development opportunities, among others.

“Given the continued strong balance sheets of these leading players, and somewhat limited opportunities domestically, we expect them to continue to look overseas and grow their international investment further.”

Further reading:
Savills Malaysia