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Unformatted text preview: April 2011 issue 11 COVER STORY Liquid Returns From Property POLICY Malaysian Government Spearheads Innovation SECTOR FOCUS Unlocking the MRT’s Potential Kuala Lumpur Skyline FACILITATING & PROMOTING INVESTMENT FOR MALAYSIAN REAL ESTATE | www.malaysiapropertyinc.com LIQUID RETURNS FROM PROPERTY Malaysian REIT market enjoys stable yields by Afiq Syarifuddin & Hazrul Izwan The 2007 financial crisis in the United States is still affecting the Western and European markets this has seen investors around the world scrambling for investment vehicles that can generate attractive returns without them having to take colossal risks. One of these vehicles is the real estate investment trust (REIT), which is featuring prominently on investors’ radars. As a listed vehicle managed by real estate professionals, REITs explore a portfolio of income-generating properties and distribute net returns on a regular basis to provide stable yields for unit holders. (continued next page) WHAT DOES REIT MEAN? REIT is the accepted acronym for Real Estate Investment Trust. REIT companies generally invest, manage and distribute net profit through dividend payback to investors. A REIT is traded on Bursa Malaysia with the same ease of buy and sell as a normal equity. REITs don’t just rent out and manage properties in their portfolio. A high performance REIT is developed by injecting new acquisitions into the portfolio. In some countries, REITs jointly develop property projects with other entities. This will provide even higher potential returns compared with low to moderate risk investment instruments. A REIT is a good alternative asset class for those looking for dividend-yielding investments. INVESTOR PREFERENCES Capitalising On Asia Pacific CEO’S SPACE Let’s Talk About Our Real Estate NEWS FLASH More Demands For Hotel IN A NUTSHELL Stable Growth For Malaysian Real Estate COVER STORY 2 (from previous page) REITs first made an entry into Malaysia in the late 1980s with the advent of Arab-Malaysian Property Trust. At that point in time, Malaysia had established the framework for real estate trust funds under a set of guidelines called Listed Property Trusts (LPTs). However, due to the lack of tax transparency and fund liquidity, LPTs developed relatively slowly in Malaysia and went into relative obscurity until the Securities Commision revised the LPT rules as relaunched them under the newly formed REIT Guidelines in 2005. With the new guidelines in place, the Malaysian REIT (M-REIT) market is expanded from 1 REIT in August 2005 to 13 currently and is expected to grow further over time. However, it is still considered small compared with other REIT markets in the region, with only 13 players a market capitalization of RM10 Billion. Of this, 10 are conventional, while three others are Shariah- compliant....
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- Spring '11