The three giant institutional investors(IV) in Malaysia, namely Employees Provident Fund (EPF), Lembaga Tabung Haji (TH) and Permodalan Nasional Berhad (PNB) have been venturing into overseas property market lately. All the three IVs are also known as Government Linked Investment Companies (GLICs). GLICs are an entities that invested most of their funds into GLCs in Malaysia. Like the EPF, both TH and PNB are looking to buy into existing premium properties for their yield. All three IVs had targeted London as their first choice, followed by Australian cities. However, it still isn't clear how much both funds are aiming to spend on overseas properties.
Last year, PNB bought an upmarket office block in Brisbane, Australia, called Santos Place, reportedly for more than A$290mil (RM928mil). The 37-storey building has 373,508 sq ft of lettable space with about two-thirds of that leased to Australian oil and gas giant, Santos. To date, the EPF has been the most aggressive among the Malaysian-based IV with most, if not all, its overseas investments in Britain.
The pension fund has so far confirmed the purchase of four British properties costing a total of 634mil (RM3.1bil). It issued a statement last year that it was putting aside 1bil (RM4.85bil) for its British property investments. Most of Tabung Haji's overseas investments to date have been in Mecca and Madina in the Middle East. It also has property investments locally.
PNB manages a fund size totalling RM150bil while Tabung Haji manages funds totalling RM28bil. Sources said both funds were looking to invest in properties primarily in London, Sydney, Melbourne and Perth, although they were open to other locations.
Unlike the EPF, which was putting aside RM1bil for overseas property investments, both PNB and Tabung Haji did not disclose any figures. The only criteria was that, their property investment must be syariah-compliant and has so far been very firm about this.
However, as responsible IVs in Malaysia, they should observe the main objective of their stakeholders. All investments must be really viable and transparent. Before going into the overseas market, risks analysis should be conducted to ensure that invested capital will not be lost along the way. There must be a short, medium and long term goals on each investment made. At the end of the day, these IVs should be accountable to their stakeholders.