London Properties Eyed by Takaful Malaysia
Syarikat Takaful Malaysia Bhd has identified several properties in London which potentially can yield very favourable returns to its funds in line with plans to broaden its income through properties.
Group managing director Datuk Mohamed Hassan Kamil said office type buildings in the British capital could potentially fetch yields in excess of 7.0 per cent, much higher than Kuala Lumpur properties, which makes investing in properties there worthwhile.
To this end, the insurance and Takaful operator has set criteria for selection of its investment in UK properties that would be able to generate a income over the long term.
He also said that the depreciation of the British pound and a devalued market were making investment in London properties attractive.
The proposed investment in UK properties is among strategies to enhance returns on investment for Takaful Malaysia’s funds, he told Bernama recently.
In addition, the properties must have strong tenants with lengthy lease periods, commensurate with the risks and in the meantime match Takaful Malaysia funds’ assets and liabilities profile, Mohamed Hassan said.
“We are looking mostly at office type buildings where we have seen yields of more than 7.5 per cent and the lease tenure term being quite attractive exceeding 10 years.
“Currently, we are still conducting due diligence which covers all the commercial, legal, financial aspects and the physical status of the property itself.
“We will be engaging professionals to conduct the due diligence which comprises among others lawyers, engineers, accountants and valuers,” he said.
Mohamed Hassan said the Board has approved an investment of 50 million pounds (RM200.45 million) to diversify its investment portfolio this year and it may be looking at one or two properties to add to its portfolio, adding the funds will come entirely from Takaful’s fund for investment purposes.
Earlier a report said that Bank Negara Malaysia limits local insurers to invest up to only five per cent of their total assets overseas.
This means that Takaful Malaysia will have about RM250 million for property investments overseas from the total RM4.9 billion in investment assets.
With the additional property investments in London, Takaful Malaysia hopes that the overall performance of its funds will improve considering the difficulty of Malaysian properties to garner a yield exceeding 7.0 per cent unlike in London.
The Islamic insurer is also looking at the tax structure that can be used to invest in properties in the UK, he said.
“Different countries have different tax structures which we have to understand in order for us to maximise tax savings so that the net returns remitted back is higher.
“In this case, being an overseas investor in the UK and subject to the right investment structure, Takaful Malaysia would be able to utilise certain tax incentives given by the authorities there,” he added.
The investment in UK properties would not be similar to a Real Estate Investment Trust (REIT) as it would not create any trust fund, he said.
Takaful Malaysia will be the first wholly-owned Malaysian insurer to acquire properties overseas if successful, and Mohamed Hassan expects that any potential London property investments would be the start of the company’s plan to expand its income through properties.