Best REITs In Malaysia And How To Invest In Them
If you are an investor in Malaysia, the chances are that you are looking for investment opportunities that are low risk but yet manage to achieve significant returns. And if you are looking in the country’s property investment sector, then it is probably a good idea to consider REITs.
REITs are Real estate investment trusts which provide investors with an option of investing in the property market without directly owning property, unlike traditional real estate investment. However, REITs still allow investors to make significant profits from the real estate market. They have also been growing popular because unlike traditional real estate investments; they do not require large initial investments to buy or build property.
There are different types of REITs in Malaysia. They include retail REITs, hotel REITs, industrial REITs, and office REITs. Good examples of properties that are owned and managed by REITs in the country include Sunway Pyramid, Gurney Plaza, and Midvalley shopping malls.
Top REITs you should consider in Malaysia
Below are some of the best REITs that you might want to consider in Malaysia if you are planning to invest in the REITs market.
- Maybank- This is the biggest bank in Malaysia, and it offers Islamic banking through Maybank Islamic, and it also has an insurance business handled through Etiqua Insurance. It also offers a REIT service and is one of the best options for anyone looking to invest in a banking REIT. It offers a 6% dividend yield making it an attractive option.
- Hong Leong Bank- This is also one of the popular REITs in Singapore, and it also happens to be a banking REIT. It achieved impressive yields in 2018 with earnings that topped expectations. It also highlights the growing popularity of banking REITs because they are backed by the banking business which generates a lot of revenue.
- Yong Tai- This is a popular REIT that focuses on the tourism sector and is therefore classified as a hotel REIT. It is a good investment option given the fact that it is performing well and it targets an industry that is generally a strong revenue generator.
- Wah Seong- This REIT has its operations or facilities in 18 countries including Malaysia. It, therefore, has a lot going for it and the fact it has so many facilities is an indicator that it probably has good management. Its locations include Africa, Latin America, Canada, East Asia, India, South East Asia, China, Europe, and the Middle East.
- Bumi Armada- This particular REIT is also characterized by impressive earnings which in turn allow investors to earn good dividends. It was also among the top REITs in 2018, and it will probably continue to perform in 2019. It has also been gaining more traction as far as global interest is concerned.
- SKP Resources- This REIT has demonstrated a lot of potential for earnings growth. It is one of the REITs that are considered ideal for new beginners in the REIT investment market.
- CIMB- It demonstrated improvement in 2018 and analysts are convinced that it is one of the ideal REITs in Malaysia. It is thus a good option for anyone that is thinking of investing in Malaysian REITs.
- Axis REIT- This is a property REIT that rents out office and warehouse space. It is one of the REITs that are known to perform well.
- KPJ Healthcare REIT- Just as the name suggests, this REIT focuses on the healthcare industry. It has its investments in hospitals which means it has a perpetual business, making it a good investment.
- YTL REIT- This REIT has its properties in the hotel industry with properties ranging from hotels to resorts.
REITs are just like any other form of investment that requires proper market analysis and significant input to generate appropriate returns. For example, an investor who is planning to invest in a retail REIT that has put up a mall should consider various factors such as the location, ease of reach by customers, the actual businesses that will buy into the REIT and the rate of shop uptake in the mall.
The dividend payout may also vary, but investors should generally look for REITs that offer decent dividend yields. Some rates might promise dividends that are too high, and that might be a red sign for a REIT that is questionable.
The REIT sector is known to produce an average of 6% to 8% in annual dividends. Some even achieve double digits, but they are these are rare, and the investors that get to enjoy such rates are those that invested in such REITs between 2008 and 2009 when the markets crashed.
Malaysia is generally a good place to invest in REITs especially because it is one of the leading countries in South East Asia in terms of economic growth and development. The country has achieved a lot over the past few years, and its REITs are considered among the best out of all the developing countries in the world. Things are also expected to continue getting better as the Malaysian market adopts new trends such as e-commerce. The result of this trend is increased revenue for businesses in the warehousing industry. This translates to more revenue for them and subsequently more dividends for investors.
Although REITs are considered good investments, it is also important to factor in the risks that may be involved in particular types of REITs. For example, hotel REITs might be affected in a country when there are risks such as terrorism which discourage tourists from visiting the country. This is why it is necessary to carefully evaluate the market before selecting the ideal REIT to invest in.
The ideal REIT to invest in should feature dividends that increase over time. Also, make sure that the REIT you invest in has property located in strategic areas to maximize their revenue. The performance of a REIT also comes down to how well it will be managed. The management should thus include professional individuals that can handle the business in good and bad times.