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Canada Pension Fund and Malaysian investment

The Canada Pension Plan Investment Board (CPPIB), the largest pension fund manager in Canada has taken a stake of 49 percent in Pavillion Damansara Heights. The other half is owned by the Pavillion Group. The stake is worth US$130 million (RM550 million) based on latest exchange rate. This will be CPPIB’s first direct real estate investment in Southeast Asia region. The project is a freehold development which has corporate towers, luxury residences and a retail galleria which is less than 10km away from Petronas Twin Towers. The size of the development is 15.84 acres and will be divided into two development phases.
As per reported in the media, unconfirmed reports said that nine of the office blocks have been sold on an anabolic basis to corporations at a benchmark price of RM1,500 per sq ft. These corporations can rename the towers too, a plus point for additional branding. Based on calculation, the rental price will fetch RM8 per sq ft and this gives an annual yield of 6%. My previous  company was renting an office lot in Bangsar South for RM5.50 psf. Thus, RM8 per sq ft is very good price indeed and furthermore, this is not in the city centre but is in Damansara Heights. I find it hard to believe but the report said that with the great response to the office units, the residential high-rise units may be preview at RM1,500 per sq ft. This would set a new benchmark as prices in Bangsar is lower. Read here: Bangsar for less than RM800psf? Yes, Still available
No matter what the actual prices may be, let’s wait for the formal announcement. The most important point is that this Canadian pension fund is investing in Malaysia at a time when every negative comment in Facebook are predicting Malaysia to become a ‘failed state.’ Read my personal views here: Uncertainty in Malaysia? My personal 4 signs Anyway, just wanted to let everyone know that I dislike excessive speculation. This is especially to those who believe in paying premiums on top of premiums and hope that when the keys are handed over, they can sell ever higher! However, for certain areas where they are already a primary spot, the interest remain strong thus far under the current slowdown of transactions. Hope the second Canadian fund comes, followed by the third and so on. Welcome Canada! Let’s  grow together.
written on 4 Sept 201
Next suggested article: I also hope US economy would show great numbers

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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