Interest in real estate investments piques amongst institutional investors (By IFN)

Interest in real estate investments piques amongst institutional investors

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GLOBAL: Malaysia’s Pilgrims Fund Board (Tabung Haji) today announced that it will increase its investments in the real estate sector to 20% this year, from the current 13%, after recording healthy returns in 2012. Tabung Haji, which can only invest in Shariah compliant investments, is looking to ramp up its real estate investment portfolio based on healthy yield projections of 5.5% to 6% for 2013. The fund’s group managing director and chief executive, Ismee Ismail said: “We can only invest in Shariah compliant investments so our challenge is always to find Shariah compliant investments in the form of real estate. We expect to further increase our investments in the real estate sector, and going by the allocation, we should invest up to 20% of our fund in real estate.” He added that Tabung Haji’s real estate investments in Malaysia and overseas have yielded good returns, and that the institution will continue to pursue this investment strategy in order to afford the best returns to its depositors. Tabung Haji is not the only major government-backed institution in Malaysia which is heavily invested in real estate. Other major Malaysia-based corporates such as Sime Darby and the Employees Provident Fund are also active purveyors of the UK property market, with Takaful Malaysia just recently being added to the list. Towards the end of last year, Takaful Malaysia made its first overseas investment in the London property market, citing the depreciation of the British pound and a devalued market as reasons for its investment debut. Speaking to Islamic Finance news, a banker said: “Investments into the property market is a very positive move, and the right thing to do. There is value in investing in real estate, particularly in London, as the yields— especially in Zone 1 and 2 are very good, and the British pound being on the low side right now makes investing even more attractive. However, outside of London, a lot of home owners are on negative equity. But it is obvious that in London, demand has outstripped supply.”