KWAP willing to accept 4% returns from property investments

I do not have funds huge enough to start a foreign property investment currently. My daughter is also too young for me to buy a property today and having to wait for 15 more years or more. Yes, if she is studying overseas, of course it would be in the UK. Sorry yeah Australian or U.S. supporters. Reported by Bernama, Malaysia’s second largest pension fund, The Retirement Fund Incorporated (KWAP) is however looking at property investments particularly in France and Germany, despite the current volatility. Its Chief executive officer Datuk Wan Kamaruzaman Wan Ahmad said, “We do have minimum returns that we are expecting from our real estate investments; unfortunately, the one that we are looking at, located in Paris and Germany, have below 5% ratio.”
KWAP has also revised its minimum return ratio from 5% at present to 4%. In terms of the UK, he said, “The pound sterling has weakened by 15%-20% and it actually made investments cheaper and tourism industry booms as compared to the euro. It hasn’t been that cheap therefore I quite like the UK market rather than the European market.” I think I would agree with him in the sense that the UK presents a better value proposition than many other European nations. This is despite the looming “Brexit” application in March 2017. Yes, I personally do believe staying within the European Union has more advantages than to abandon the grouping simply because of immigration issues.
One good friend recently said, ‘What if the UK Prime Minister chooses NOT to proceed with the application to say goodbye?’ I smiled and said, I would hope so too but I guess it would be an extremely tough decision to make as it would be against the referendum which was won by those who voted to leave. It’s highly unlikely. Anyway, coming back to the property investments, there was no mention about any other ASEAN nations. Perhaps KWAP is worried of contagion effects since ASEAN is usually seen as the same market. For my personal unit trust investments, I have chosen funds with exposure to the ASEAN market, for example Indonesia. As of now, my returns are very slightly above the 5 percent mark which I think is still okay.
By the way, Wan Kamaruzaman also mentioned something I wrote before, about the time needed for property investment. “We are trying to give priority to Malaysia but slowness in closing deals is one of the constraints that we face as it can take up to a year unlike overseas’ investment which can be concluded around three to four months.” It meant that there are more red-tapes for property investments within Malaysia compared to these more advanced European nations. The state authorities should listen and quickly improve. When we talk about investments, we want to buy and wait and not WAIT very long just to buy. Agree? Anyway, I do hope KWAP is really doing lots of homework because investments should be a calculated risk and current market condition does not make it any easier.
written on 31 Oct 2016
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