EcoWorld sees ‘silver lining’ for ‘savvy investors’ in Brexit

PETALING JAYA (June 24): Eco World International Bhd (EWI) sees a “silver lining” for savvy investors in the UK referendum’s surprising “Leave” outcome, as it marks the end of protracted uncertainty while the consequent weakening of the pound sterling will encourage foreign investment in the property market.

“Now that the results of the EU referendum are known, the long uncertainty which has caused many investors to hold back on decision making is finally over. Britain is still a hugely important economy in Europe with highly principled, professional and competent leaders. I have every confidence that the UK Government will do their utmost to take proactive measures to assuage post-Brexit concerns and move the United Kingdom forward on every front,” said EWI executive vice-chairman Tan Sri Liew Kee Sin in a statement today.

“A weaker sterling will in fact help our Malaysian, Singaporean, China and Hong Kong-based customers by bringing down their cost of investment. Further, customers from these countries buy London properties for reasons which have nothing to do with whether the UK is a part of the EU,” he added.

He noted that London will continue to be a prime destination for global property investment as many of the fundamental drivers of demand – such as transparency of laws, security and ease of ownership, shortage of supply, London’s attractions as a global education, cultural, tourism hub, among many other factors – are still intact.

Liew said he is also confident about the group’s prospects from a corporate standpoint.

“Boris Johnson, a prominent Brexit leader is pro-development as proven by his track record as Mayor of London. He is backed by many senior and experienced leaders and now that the British people have spoken, the entire British Government will be focused on ensuring that Britain sends out a clear message that it remains ready and open for business. This will benefit companies seeking to invest and grow their business in the United Kingdom,” he said.

EWI is undertaking a listing and initial public offering (IPO) in Malaysia to fund the development of its projects in the UK and Australia.

The listed Eco World Development Group Bhd is expected to subscribe up to 30% of EWI’s enlarged paid up and issued capital in conjunction with the proposed IPO.

“For EWI specifically, it should be noted that through our proposed IPO, we will be raising equity in ringgit. Now that the sterling has dropped it means that the cost we have to inject into the UK to pay for the development of our three projects there will be lower. If this situation holds, it will also make it cheaper for EWI to acquire new sites post-listing,” he explained.

EWI currently has three projects in London – namely London City Island (Phase 2) in East London, Embassy Gardens (Phase 2) in Nine Elms and Wardian London facing Canary Wharf.

The projects were launched last year, and purchasers of London City Island are scheduled to take the keys to their units in 2018, while purchasers of units at Embassy Gardens and Wardian London will receive their keys in 2019 and 2020.

“The UK’s accounting rules permit profits from development projects to be recognised only upon handover to purchasers. Accordingly, the post-Brexit weakness in the sterling will not have a negative impact on EWI’s financials post-listing,” said EWI in the statement.

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