ASSESSING THE IMPORTANCE OF FACTORS INFLUENCING THE FUTURE DEVELOPMENT OF REITs IN MALAYSIA

ASSESSING THE IMPORTANCE OF FACTORS INFLUENCING THE FUTURE DEVELOPMENT OF REITs IN MALAYSIA

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Pacific Rim Property Research Journal, Vol 16, No 3, 2010 358 ASSESSING THE IMPORTANCE OF FACTORS INFLUENCING THE FUTURE DEVELOPMENT OF REITs IN MALAYSIA GRAEME NEWELL University of Western Sydney and ATASYA OSMADI Universiti Sains Malaysia ABSTRACT REITs in Malaysia (M-REITs) have become an important property investment vehicle in Malaysia since 2005. This paper reports the results of a major industry survey in Malaysia to assess property industry views regarding the key factors influencing the future development of M-REITs. Key factors emerge regarding the future development of M-REITs. These key factors for the future development of M-REITs include tax issues, provision of professional M-REIT services, availability of quality properties and strategic property locations; reflecting the need for both regulatory changes and clearly articulated growth strategies for M-REITs. Keywords: Malaysia, M-REITs, future development, fund managers, property advisors, key factors. INTRODUCTION Property markets in Asia have taken on a more significant role in portfolios, given the strong economic growth and improved property market maturity and transparency in the Asian property markets in recent years (Chin et al., 2006; JLL, 2008). A number of the major global property fund managers now have significant Asia property portfolios in their global property mandates. This includes both direct property (eg: ING, RREEF, UBS, LaSalle and Pramerica) and property securities funds (eg: Cohen Similarly, REITs in Asia have also expanded rapidly since being established in 2001. At September 2009, there were 101 REITs in Asia across Japan, Singapore, Hong Kong, Malaysia, Taiwan, South Korea and Thailand; with domestic and pan-Asia portfolios. This saw Asian REITs with a market capitalisation of over US$63B,
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Pacific Rim Property Research Journal, Vol 16, No 3, 2010 359 accounting for 12% of the global REIT market capitalisation at September 2009 (Macquarie Securities, 2009). Within this Asia REIT context, Malaysia established a REIT market (M-REITs) in August 2005, with 13 M-REITs established by September 2009, including the world’s first Islamic REIT in August 2006. This sees another important source of listed property exposure in Malaysia, in addition to the long-established listed property companies sector. Given the early stages of developing this REIT market in Malaysia, the purpose of this paper is to present the results of a major industry survey to assess the importance of factors likely to influence the future development of REITs in Malaysia. SIGNIFICANCE OF REITs IN MALAYSIA Listed property companies in Malaysia Malaysia has seen significant growth in recent years, with GDP growth of 5.3% forecast for 2010 (JLL, 2009). Importantly, Malaysia is seen to offer a competitive business environment (#24 globally) (WEF, 2009) and was not as adversely affected by the global financial crisis as most other Asian markets (Newell and Razali, 2009),
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This note was uploaded on 10/09/2011 for the course 323 3232 taught by Professor 3232 during the Spring '11 term at Apex College.

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ASSESSING THE IMPORTANCE OF FACTORS INFLUENCING THE FUTURE DEVELOPMENT OF REITs IN MALAYSIA

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