ECO World International Bhd (EWI) is boosting its presence in the United Kingdom’s real estate market by fourfold to tap the housing sector’s potential there.
The UK housing market is “stuttering” but recent surveys from major mortgage lenders Halifax and Nationwide paint a more buoyant picture of the housing market.
Halifax reported that house prices in the UK were rising at their fastest annual pace since February, up 4.5 per cent to a record £225,826 (RM1.25 million).
Nationwide house price index also showed prices picking up last month to an annual rate of 2.5 per cent, the highest reading recorded in three months.
The rise in prices was largely due to a shortage of homes rather than a recovery in demand, said the lender.
Recently, EWI announced a partnership with one of UK’s top construction firm Willmott Dixon to jointly develop 12 sites in Greater London and the southeast of England.
It inked a heads of agreement (HoA) with Willmott Dixon to acquire a 70 per cent equity interest in 11 project sites there.
EWI said in a statement that the proposed acquisition will enable the group to enter an extensive part of the popular London property market.
This includes projects in Barking and Dagenham, Barnet, Brent, Bromley, Ealing, Hounslow, Lambeth, Tower Hamlets, Westminster and also outside of London in Woking, which are all attractive areas for home ownership.
EWI said that the acquisition was expected to be formalised next month and had the potential to increase its presence in the UK by giving it access to a sizeable landbank of about 6,700 residential units with a total gross development value (GDV) of at least £2.5 billion.
There is also a framework agreement in place for the development of a further 1,500 units on the 12th site.
All these would add around 8,200 units besides the EWI’s current three ongoing projects in prime central London where it is constructing 2,500 high-end residential units under a joint venture with Ballymore Group.
The three London projects have proven to be quite successful and recorded sales of RM1.31 billion in the first 10 months of the financial year ending October 31 2017.
The company is forecasting sales of its London projects to pick up in September-October this year. This is on the back of several international roadshows that have been planned to promote its projects in the UK in tandem with local marketing campaigns targeting Londoners as they return from their summer vacations.
EWI executive vice-chairman Tan Sri Liew Kee Sin said that the deal with Willmott Dixon would potentially expand the group’s presence in the UK to four times its current size.
The HoA would enable the group to gain substantial local market share due to the location of the projects and the nature and affordable price points of the proposed developments.
“Most of the projects fall within the price bracket that would entitle potential buyers to benefit from government homeownership initiatives, such as the Help to Buy scheme. The government will provide an equity loan for newly built residential properties of up to 40 per cent of the price within Greater London and 20 per cent outside London,” it said.
EWI said it would also potentially acquire a 70 per cent stake in Be Living Ltd, Willmott Dixon’s development management arm.
“This will provide us with a strong pool of talent and manpower resources to bring our UK business to greater heights going forward,” said EWI president and chief executive officer Datuk Teow Leong Seng.
EWI’s long-term goal is for the group to be a truly international developer with strong local presence and customer following in the UK, similar to what the Eco World brand enjoys in Malaysia today.