Malaysian fund buys from Union in record Kuala Lumpur deal

Malaysian pension fund Kumpulan Wang Persaraan (KWAP) has bought a prime office tower in Kuala Lumpur from Germany’s Union Investment Real Estate.

Union Investment had held the 41-storey Menara AIA Cap Square building in its open-ended real estate fund Unilmmo: Europa since 2008.

Despite KWAP being the second-largest pension fund in Malaysia, the 601,796sqft tower will become its second real estate asset in the country’s capital. The pension fund purchased the 39-storey office block Integra Tower for MYR1.06bn (€227m) in April 2015.

According to JLL, which advised Union Investment on the transaction, KWAP has recently been looking at real estate opportunities in its domestic market, and in Kuala Lumpur particularly.

JLL said this interest coincided with KWAP’s sale of an office building in London, 88 Wood Street, earlier this year.

The deal in Kuala Lumpur is the biggest office building sale in Malaysia this year.

YY Lau, managing director at JLL Malaysia, said: “This is a high profile property in a desirable location with an enviable occupancy rate and top quality tenants.

“With this purchase, KWAP is demonstrating its confidence in the Kuala Lumpur office market and we expect there will be increased interest in other grade-A office properties as a result, from both domestic and international.”

Hamburg-based Union Investment bought Menara AIA Cap Square in 2008 as a development project.

Today, the building, which was completed in 2010, has an occupancy level of 89% and is home to insurance and financial tenants, including AIA and Citibank.

Union Investment said the sale represented a “strategic review of its portfolio”, but the German fund manager “remains active in the Asia-Pacific region”.

It said it was particularly focused on expanding and diversifying its core real estate portfolio into the retail and hospitality sectors.