REITs have become an integral part of our daily lives in Malaysia. From the shopping malls we frequent to the hotels we stay in, REITs often own and manage these properties. In this article, we will explore the best REITs in Malaysia and why investing in them is a good opportunity.
What are REITs?
REITs are investment funds or trusts that own and manage income-generating commercial real estate properties. These properties include shopping malls, offices, hotels, hospitals, and industrial properties. Essentially, investing in REITs allows you to become a partial owner of these valuable real estate assets.
Types of REITs in Malaysia
There are five primary types of REITs in Malaysia:
- Retail REITs - focusing on shopping malls.
- Hospitality REITs - centered around hotels and serviced residences.
- Office REITs - specializing in office buildings.
- Industrial REITs - dealing with warehouses, logistics facilities, and data centers.
- Healthcare REITs - dedicated to hospitals and nursing homes.
Why Malaysia? A Glimpse into the Malaysian Real Estate Market
Despite economic uncertainties and external challenges like the global pandemic, Malaysia's property market has shown resilience. Supportive government policies, incentives, and infrastructural developments have boosted property transactions and confidence among buyers and investors.
The commercial property segment, in particular, has seen growth due to increased e-commerce and logistics services demand. These factors illustrate the property market's ability to adapt and thrive in challenging times.
Overview of Top 10 Best REITs in Malaysia
Now let's take a closer look at some of the best REITs in Malaysia:
1. Sunway REIT
2. KLCC Property Stapled
KLCC Property Stapled is the largest and one of the best REITs in Malaysia in terms of market capitalization. Its portfolio includes the PETRONAS Twin Towers and other high-quality office buildings.
3. Pavilion REIT
Pavilion REIT owns iconic landmarks in the Klang Valley, including Pavilion Mall, Intermark Mall, and Elite Pavilion Mall. With a focus on the retail and corporate office sectors, it is one of Malaysia's most reliable REITs.
4. Sentral REIT
Sentral REIT primarily focuses on corporate office properties and also has investments in retail assets and car parks. It boasts a high average occupancy rate, making it a stable choice for investors.
5. IGB REIT
IGB REIT owns two prestigious shopping malls: Mid Valley Megamall and The Gardens Mall. These malls have maintained exceptional occupancy rates even during the challenging times of the COVID-19 pandemic.
6. Capitaland Malaysia Mall Trust
Capitaland Malaysia Mall Trust primarily focuses on shopping malls and currently owns five properties. It offers potential for steady rental income in the long term.
7. UOA REIT
UOA REIT centers its portfolio on corporate offices and has a strong average occupancy rate as of December 2019.
8. Axis REIT
Axis REIT boasts a diversified portfolio in various regions of Malaysia, focusing primarily on the industrial sector. It offers an attractive distribution yield for investors.
9. YTL Hospitality REIT
YTL Hospitality REIT operates within the hospitality industry and has a diverse portfolio of hotels and resorts across Malaysia, Japan, and Australia. It presents a unique investment opportunity.
10. Al-Aqar Healthcare REIT
Al-Aqar Healthcare REIT predominantly consists of healthcare-related properties, including hospitals, care centers, and higher education properties. It offers investors the opportunity to diversify their portfolios.
Why You Should Invest in Malaysian REITs
Investing in Malaysian REITs offers several advantages:
1. The Power of 90% Distribution for Prosperous Dividends
REITs are known for their tax-efficient strategy, with a substantial portion of their earnings distributed to shareholders as dividends. This often results in higher dividend payments compared to other shares.
2. Diversification: A Multifaceted Canvas
Investing in REITs allows you to diversify your portfolio across various property types and geographical locations. This diversification minimizes risk and offers potential for steady returns.
3. Low Entry Threshold for Aspiring Real Estate Tycoons
With as little as RM1,000, you can invest in valuable real estate assets. REITs provide an opportunity to enter the real estate market with a lower initial investment compared to purchasing properties individually.
4. Liquidity: The Swift Current of Investment
REITs offer liquidity, allowing you to buy and sell shares quickly and easily. This flexibility is particularly advantageous in times of financial exigency.
5. Entrust the Professionals
Investing in REITs means entrusting the management of properties to seasoned real estate specialists. These professionals handle property acquisitions, sales, and management, offering peace of mind to investors.
How to Buy REITs in Malaysia?
Investing in REITs in Malaysia involves several steps:
- Select a brokerage platform suitable for your needs.
- Open a trading account with the chosen brokerage.
- Fund your account by depositing funds.
- Research and select REITs that align with your investment goals.
- Purchase your chosen REITs through your trading platform.
By following these steps and conducting thorough research, you can begin your journey of investing in Malaysian REITs.
Understanding Tax Advantages of Malaysian REITs
Malaysian REITs enjoy several tax advantages, including:
- Exemption from income tax when a minimum of 90% of taxable income is distributed to shareholders.
- Exemption from property-related taxes such as stamp duties and Real Property Gains Tax (RPGT).
These tax advantages contribute to the attractive dividends offered by Malaysian REITs.
Conclusion
Investing in REITs in Malaysia can be a rewarding experience, offering diversification, steady income, and potential capital appreciation. By carefully selecting the best REITs that align with your investment goals, you can build a strong real estate portfolio. Remember to conduct thorough research and seek professional advice before making any investment decisions.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. The BizTech Community does not guarantee the accuracy or completeness of the information provided. Always consult with financial experts before making investment decisions.