Sime Darby Property strengthens growth through property development funds

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Highlights

Sime Darby Property now manages two property development funds with a combined value of RM2.25 billion, attracting major institutional investors such as PNB, KWAP, EPF and Great Eastern.
The group’s investment and asset management division manages approximately RM4.4 billion in assets, including hyperscale data centre leases that commenced operations in April 2024.
The development fund model enables the company to accelerate growth and strengthen recurring income, in line with the SHIFT32 strategy based on the use of third-party institutional capital.

This article was translated from the original. Read the original version by our correspondent here.

Development fund strategy and target assets

As reported by The Edge Malaysia Weekly, Sime Darby Property began pursuing the investment fund route around five years ago to expand its business without putting pressure on its balance sheet. Group managing director and CEO Datuk Seri Azmir Merican said the fund management model enables the company to raise capital, identify opportunities and develop suitable fund types, while REITs are viewed as the end instrument for monetising stabilised assets.

To date, the group has established two institutionally backed private property development funds: the Industrial Development Fund and New Economy Venture. According to the company, development funds allow institutional capital to enter while assets are still being built and leased, creating opportunities for fee income and co-investment returns before the assets are transferred to platforms such as REITs.

The Industrial Development Fund was established in 2021 through a joint venture with LOGOS SE Asia Pte Ltd, with Sime Darby Property holding a 51% stake in the SDPLOG joint venture. The fund began with immediate capital of RM500 million at its first close and grew to RM1 billion in size, backed by institutional investors including Permodalan Nasional Bhd and Kumpulan Wang Persaraan (Diperbadankan).

The capital is being used to develop logistics assets over three years, starting with the 177-acre E-Metro Logistics Park in Bandar Bukit Raja, Klang. The project includes ready-built and build-to-specification facilities targeting Gold LEED certification for sustainable buildings.

New Economy Venture was launched in June this year to invest in build-to-lease data centres as well as industrial and logistics development projects in Sime Darby Property’s key townships in Malaysia. The closed-ended Shariah-compliant investment platform is valued at RM1.25 billion, has a five-year fund life and secured 100% of capital commitments at its first close, with support from the Employees Provident Fund, the Armed Forces Fund Board and Great Eastern Life Assurance (Malaysia).

Sime Darby Property, as NEV’s general partner and manager, contributed RM500.1 million to the core fund. Two seed assets, Elmina Business Park and City of Elmina, have already been acquired, and construction of both developments is expected to be completed in the second half of 2027.

Implications for recurring income and the Malaysian market

NEV is part of SHIFT32, Sime Darby Property’s seven-year business roadmap. Through this structure, the company diversifies its recurring income through investment returns and fee-based income, while using third-party institutional capital to accelerate development in line with its asset-light approach.

The group’s investment and asset management division now manages approximately RM4.4 billion in assets, supported by long-term hyperscale data centre leases that commenced operations in April this year. The repeat participation of institutional investors, including Great Eastern in both funds, is also seen by the company as an indication of market confidence in the fund-based development model.

Azmir said the board welcomed the development fund idea, but the main challenge was translating the concept into effective execution. In the context of Malaysia’s property sector, this model provides developers with an alternative route to finance growth earlier in the asset cycle, before mature assets are eventually channelled into REITs for monetisation and capital recycling.

In our earlier report on the approval of 27 data centre projects under the Data Centre Task Force (DCTF) through July 2026, we examined the scale of investment and the concentration of projects in Johor, Selangor and Negeri Sembilan. The article also outlined projections for high-skilled job opportunities, a minimum 30% local content requirement and regular monitoring of project implementation as key factors shaping the direction of the country’s data centre ecosystem.

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