Investor Universe - Malaysia: Appetite despite competition
Malaysian government-linked pension and retirement funds have undergone reforms to address ageing populations, rising medical costs and inadequate financial security in retirement, and many are seeking new ways to address funding gaps. Besides incentives that encourage longer and larger retirement contributions, pension funds in Asia are starting to diversify their portfolios into long-term assets such as infrastructure and commercial real estate which generate a steady income.
Pension funds in Malaysia are continuing to look for commercial real estate investments in the UK and Australia. In these countries, the rule of law is very similar to their home country. There is a big gap between their current allocations and where they need to be.
It is tougher to do core deals because there is an increased flow of capital competing for them. There has been an influx of deep-pocketed new groups, including large insurance companies, pension funds and sovereign wealth funds, which have been looking more into international commercial real estate. Most investors are looking at assets in gateway cities and, while demand has increased, supply has not as there has not been a significant amount of development over the last decade. That has driven pricing to historically high levels.
Published on IPE Real Estate, Sept/Oct 2014
Investor Universe - Malaysia: Appetite despite competition
