Islamic REITs & Capital Market Development

Islamic REITs & Capital Market Development - Islamic...

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Islamic REITs & Islamic Financial Markets Conference & Specialised Workshops Karachi, Pakistan - 24 & 25 January 2007 Securities Commission Capital Market Development Nik Ruslin Nik Jaafar Securities Commission of Malaysia
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Development of global REITs - where & when they started… Country Year Introduced Europe Country Year Introduced North America Canada 1994 United States 1960 Securities Commission 2 Country Year Introduced Asia-Pacific Australia 1971 Hong Kong 2003 Japan 2000 Korea 2001 Malaysia Late 1980 s Singapore 2002 Taiwan 2003 Belgium 1995 France 2003 Germany 2006 Italy 1994 Luxembourg 1988 Netherlands 1969 Spain 1994 United Kingdom 2006 Country Year Introduced Latin America Mexico 2004 Brazil 1993
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Increasingly become an important asset class in the global capital market Global REITs Value (USD) Year Value (Million) Growth 2000 $181,100 Region % Value @ Securities Commission 3 2001 $206,800 14.2% 2002 $223,500 8.0% 2003 $308,700 38.1% 2004 $424,600 37.5% Source : “Trends and Development in REITs”, Graham Sugden,REITs: Broadening Investment Opportunities In Malaysia, Securities Commission, Malaysia, 2June 2005 United States 72.5% Asia Pacific 14.9% Europe 9.8% Canada 2.8%
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Increasingly become an important asset class in the global capital market otal REITs by region • Global REIT Report 2006 estimated that listed REITs worldwide with a total market capitalisation, of USD608 billion. After taking into account the effect of gearing, this represents in excess of USD890.9 billion in property assets within the Global REIT sector Securities Commission 4 Source : Global REIT Report 2006, Ernst & Young Total REITs by region 286 75 64 59 0 100 200 300 400 North America Asia Pacific EMEA
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What are Real Estate Investment Trusts (REITs) • Malaysian REITs are in the form of: 9 collective investment vehicles (typically trust funds) 9 which pools money from investors and uses the Securities Commission 5 pooled capital 9 to buy, manage and sell real estate assets, such as residential or commercial buildings, retail or industrial lots, or other real estate-related assets (e.g. shares in public-listed property companies, listed or unlisted debt securities of property companies etc.)
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The importance of REITs Key benefits of REITs • Higher dividend yield 9 REITs are required to distribute at least 90% of its income • Transparent investment policy 9 Transparent and defined investment policies Securities Commission 6 • Lower transaction costs and greater liquidity 9 Listed REITS are traded like stock • Scaleable investment vehicle 9 More scaleable compared to property investment companies • Diversification of risk 9 Portfolio of properties with different lease lengths, geographical locations compared to single properties Source: Securities Industry Development Centre Quarterly Bulletin, February 2005 UBS Investment Research : Malaysian Property Sector, UBS Equity research Malaysia Sdn Bhd, 12 May 2005
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• REITs in Malaysia are governed by: 9 Securities Commission Act 1993 9 Guidelines on Real Estate Investment Trusts 9 Guidelines for Islamic Real Estate Investment Trusts (For Islamic REITs) roperty trusts have existed in Malaysia
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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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Islamic REITs & Capital Market Development - Islamic...

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