This article first appeared in The Edge Malaysia Weekly on September 29, 2025 - October 5, 2025

IJM Corp Bhd (KL:IJM) has shifted gears in the UK in the past two years, undertaking more developments, such as regenerating and repurposing heritage buildings into ESG-compliant modern structures, although it started its journey in 2012. The reason is simple — the Malaysian construction giant is hungry for growth.

IJM will soon shift gears across the Causeway as well, its managing director Datuk Lee Chun Fai tells The Edge in an interview at an upscale department store in London.

“We need more markets for growth. Everyone knows the Malaysian [property] market has reached a certain saturation. The chase for property is unlike 10 years ago, when land [cost] escalation was not as high,” he says.

“The only thing that’s pushing our [property] prices is cost. You know it’s not supply-demand that is causing prices to run up, but it’s all about the cost.”

In the midst of having English tea and sweet pastries, Lee explains why IJM is looking for growth thousands of kilometres away from home, in a market beset by economic slowdown and a tight regulatory environment.

The operating landscape in the British construction and property development industry has become tough and is pushing the local developers and construction companies to the brink of bankruptcy after the country has been through a slew of major events such as Brexit, the Covid-19 pandemic and the war in Ukraine. The harsh operating conditions somehow presented IJM with the opportunity to have a foothold in the UK, particularly London.

“There is a huge housing shortage, so the banks will give you a mortgage, but the developers can’t get funding. So, if you were a developer and you could bring in the funding, you had a ready market,” says Mark Andrew Lahiff, head of IJM’s UK operations, during the interview.

“You had a lot of people waiting to buy the finished product. Interest rates were low. There was a lot of activity in the residential market. So IJM saw that there was this need. The UK developers were struggling to get funding.

“So, they [IJM] could come in, they could fund the developments and the UK buyers or others would then buy the end units. It was quite insightful on their part.”

Lahiff was introduced to IJM back in 2012 when he was looking for an investor to fund a development. That development was the Royal Mint Gardens, three blocks of luxury apartments with 265 units that overlooked the Docklands Light Railway line near the Tower Gateway station close to London’s iconic Tower Bridge.

The project, with a gross development value (GDV) of about £245 million (RM1.4 billion), was completed in 2019 and was fully sold. IJM is now embarking on the second phase of the project called 88 Royal Mint Street.

The success of the first phase has enabled IJM to make a name in London’s property market. It also drew the attention of Network Rail, which manages 20 of Britain’s biggest and busiest train stations including 11 in London, which has been looking for contractors for station redevelopment.

This led to the formation of the Innova Partnership — a 50:50 joint venture between IJM and Network Rail to redevelop selected land assets owned by the latter, which are mostly along and over railway lines. The partnership allows IJM to assess Network Rail’s assets for redevelopment and four sites have already been identified for redevelopment, plus another six at the exploration stage.

The potential GDV of all 10 sites — if IJM decided to redevelop all of them — is estimated at £7 billion. The potential of the 10 sites is huge as they are areas with a lot of footfall due to their great connectivity.

IJM has the option to develop those that it finds feasible. For stations that are too big or complicated for it to stomach, it could choose to be just the project manager of the redevelopment.

The group will act as a master developer of a site, of which other developers and investors could then take part in. The sites are still owned by Network Rail, and IJM gets a share of the GDV of the redeveloped sites.

“When we get our planning [approved], we can either exit — and there’s a formula where we get a profit — or we can buy [the project] at a discount. So, it puts us in a strong position because we can’t — with all the will in the world — deliver all of these sites [ourselves]. But we can choose the sexiest ones, the ones that can give us the most returns,” says Lahiff.

IJM estimates that the technical and planning submissions for each of the 10 sites will cost between £3 million and £5 million. If it decides not to participate in the project for some reason after the planning has been approved, it could then sell the development plan for between £20 million and £40 million.

According to Lee, with the Innova Partnership, Network Rail will match the investments put in by IJM on each of the redevelopment projects. This shows its commitment to the partnership, he says.

St Pancras International, Paddington, Liverpool Street, King’s Cross, Charing Cross and Waterloo are among the busiest train stations managed by Network Rail. The 185-year-old Waterloo station, whose passenger volume stood at 62.5 million in the financial year 2023/24, has already been earmarked for redevelopment.

“Those [10] are the sites that have been shortlisted, which they [Network Rail] have agreed to progress to the next level, to work out the engineering and for submission for consent, for planning,” says Lee.

“Actually, initially we went through more than 10 sites and we did feasibility studies both on the technical, on what is workable and not workable in that area, buildable or not buildable, and money-wise — the costs involved to build versus the price that you can sell, [to see whether it] makes sense or not.

“They have gone through one round of due diligence for all the sites. So, if we progress, then we put in more money.”

The UK has proved to be a challenging market to venture into given the build-to-sell policy, in addition to the harsh macroeconomic environment in recent years. IJM seems to have observed this for a long time before making the bold move to London.

“That’s why I always say, we come to the UK in a very measured way. We didn’t bring big bags of money to just buy, buy, buy. But [we] derisked it. Every other project is derisked,” says Lee.

“If you really look at it, even the Welwyn Garden City project, if we had sold just one piece [of the land], we would have got back [our investment] and made some profit.”

The Welwyn Garden City project involves the development of 11 acres of land where a former Nabisco shredded wheat facility was located in Hertfordshire, a suburb about a 25-minute train ride from Central London. The plan is to have 133 townhouses, a 180-bedroom apartment-hotel, 300 build-to-rent apartments and 141 retirement units.

IJM bought the land for £18 million in December 2023. It then managed to secure consent for the demolition of the shredded wheat factory, which was a Grade II-listed heritage building, but kept the concrete silos used for grain storage in the original form.

Meanwhile, IJM derisked its investments in 88 Royal Mint Street and 25 Finsbury Circus by signing long-term leases with third-party investors. Hotel operator Staycity Group is taking up a block at 88 Royal Mint Street — a development over an active railway track in the City of London.

IJM has entered into a leasing agreement with the UK’s largest independent law firm Simmons & Simmons for the latter to take up 62%, or 155,000 sq ft, of floor space at 25 Finsbury Circus — a Grade II-listed heritage building that the developer is currently refurbishing into a modern and sustainable office building. It is the largest intervention of a Grade II-listed commercial building ever consented to in London.

The refurbishment costs £150 million, with a target GDV of £420 million. The intervention will keep the original façade of the building, but will modernise the interiors, including expanding the gross internal area to 392,000 sq ft (see also “IJM Corp launching maiden UK mixed-use development by year end, plans more London projects” on Page 10 of our City & Country pullout).

Lahiff says IJM has already received strong offers from potential investors for all the townhouses in its Wheat Quarter development at Welwyn Garden City, as well as for the build-to-rent units and senior living blocks.

“We need to decide what we want to do because if we sell early, we derisk the project and we can take profit. Or, if we develop it and sell it later to the market, we will do significantly better, again depending on the market,” he adds.

“I’m of the opinion that the market is heading the right way. We’re at the bottom of the interest rate [cycle], with inflation coming down, so I think being able to bring houses to the market in about two years could be really good timing.”

Lee acknowledges that IJM will have to borrow more money to undertake the Innova projects and the Wheat Quarter development. However, it is all about managing the cash flow of the projects, so that the cash flow is able to service the debt repayment, he notes.

“You may bump up your gearing a bit, but as long as you know that what you’re doing is something very marketable, something actually quite liquid. Like this 25 Finsbury Circus, everyone who went there said, ‘I fell in love with your building’.

“Do you want to sell that? I think it’s more of whether we want to sell. It is very difficult to find another asset of that quality.”

IJM’s gearing ratio is currently 0.33%, and there is no hard limit set by the board.

The Employees Provident Fund (EPF) is IJM’s single largest shareholder with 17.6%, followed by Amanah Saham Nasional Bhd (12.92%), Retirement Fund Inc (KWAP) (8.5%) and Urusharta Jamaah Sdn Bhd (6%).

The size of this potential pipeline in the UK is almost as large as IJM’s remaining gross development value (GDV) of RM43 billion in Malaysia.

“When we structure something, we have to look at the ability to raise the funding to make sure that it’s not very capital intensive. Like all the developments here, we probably can get a loan of about 70%. So, 30% would be an equity requirement. But if you talk about total investment, those two projects [88 Royal Mint Street and the Wheat Quarter] are over RM3 billion,” says Lee.

“But our equity is only 30% there. So, for a lot of these assets, we won’t be able to hold them for the long term. We will have to monetise it, get back our capital and plough back the profit. But we would still probably own 20% to 30% of the assets. The big idea is also to work with other investors and potentially even our shareholders.”

EPF is already present in the UK property development and investment scene through a 20% stake in Battersea Power Station Development Co (BPSDC), which is leading the redevelopment of the Battersea Power Station. The provident fund also holds a 35% stake in The Power Station, the retail hub within the Battersea Power Station development, through a 65:35 joint venture led by Permodalan Nasional Bhd (PNB).

The JV acquired The Power Station from BPSDC for £1.6 billion in December 2018.

Lee reveals IJM’s intention to list its toll concession portfolio. However, he wants to make sure that the contribution from the toll concession business remains on a par with the current level post-listing. That is why the group is bidding for PNB’s Projek Lintasan Kota Holdings Sdn Bhd (Prolintas).

PNB is reportedly exploring the disposal of its toll road assets under Prolintas, which owns the Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) and Damansara-Shah Alam Elevated Expressway (DASH), as well as a 51% stake in Prolintas Infra Business Trust (KL:PLINTAS).

IJM currently owns Besraya (M) Sdn Bhd, the concessionaire for the Sungai Besi Expressway, New Pantai Expressway Sdn Bhd (NPE) and Lebuhraya Kajang-Seremban Sdn Bhd, and has a 28.12% stake in WCE Holdings Bhd (KL:WCEHB).

CGS International, in a Sept 17 report, noted that 25 Finsbury Circus is in a sweet spot as there is strong demand for large Grade A office buildings with ESG credentials in the prime City of London. “This is supported by the return of overseas capital, the new Elizabeth tube line, tenants moving out of Canary Wharf and premium rental rates at London’s West End (£182 psf in 2Q2025).

“All this will bode well for IJM’s 25 Finsbury Circus development situated in London’s City Core, which is in the process of undergoing a major refurbishment to increase its total GFA by 30% to 392,000 sq ft (NFA: 252,000 sq ft),” it said.

CGS reiterated its “add” recommendation on IJM’s shares, with a sum-of-parts-derived target price of RM3.61. The research house noted that the quicker award of projects and higher property sales as rerating catalysts for the stock, while slow project awards and higher raw material costs are downside risks.

Other research houses with a “buy” call on IJM include RHB Research, with a target price of RM3.73, CIMB Securities (RM3.70) and Maybank Investment Bank (RM3.18). IJM’s share price closed at RM2.83 on Sept 26, giving the group a market capitalisation of RM10.32 billion.

While IJM’s strategy to take a measured expansion in the UK property market may lower the risk of overexposure, it remains to be seen whether the investments will generate the kind of returns it is hoping for.  

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