GLOBAL - The MYR8.4bn (€2.1bn) Malaysian state pension fund Kumpulan Wang Amanah Pencen (KWAP) has acquired a City office asset 70% owned by the Canada Pension Plan Investment Board (CPPIB) for £200m (€250.3m).

A spokesman for UK property firm Hammerson, which owns the other 30% of the asset and sold it on behalf of the joint venture, stressed that the relationship with CPPIB would continue.

He pointed to a Glasgow shopping centre owned by the partners via an ongoing second joint venture.

Jean Lamothe, UK country manager at CBRE Global Investors, which advises Asian institutions on UK investments, pointed out that Malaysian institutions - such as KWAP’s Chinese and Korean counterparts - had targeted UK office as a first step in diversifying outside their home markets.

“So far, over the past two years, their timing has been quite good,” he said. “Product has been available at a fair price, and you have motivated sellers.”

Lamothe said he expected to see Asian investors diversify into retail and logistics as an “obvious next step”, especially given what he sees as room for additional retail space in the UK.

“Asian investors will be important players in the market over the next few years,” he said. “Our house view is that you have to be selective and invest at the micro level, so, of course we’d invite them to invest in granular assets. But foreign investors usually preferred chunky assets.”

Hammerson earlier this year announced that it would sell its UK holdings, including the Gresham Street asset acquired for £175m in 2010, to focus on retail.

In May, it announced it had sold the bulk of its office portfolio to Canadian developer Brookfield for just under £520m.

The company’s spokesman said its remaining office holdings comprised “bits and pieces”, with one significantly sized office asset in Victoria.