I’m confident that most of you have heard of a Real Estate Investment Trust at some time in your investing career. Real Estate Investment Trusts (REITs) are a type of securities that invests in real estate and is frequently traded on public stock markets. REITs in Malaysia and around the world benefit from favorable tax treatment and typically give larger dividend yields than other corporations.
The first real estate investment trust was established in the United States in 1960, providing investors with the chance to participate in massive real estate holdings. The first real estate investment trust (REIT) established in Malaysia was Axis REIT, which was established in 2004, 44 years after our American counterparts. From this point forward, we shall be talking about REITs in Malaysia this year 2022.
What Are REITs?
It is possible to argue that nearly every Malaysian has come into contact with a real estate investment trust (REIT) in some form or another. Shopping malls, office buildings, hotels, factories, and warehouses are all places you’ve probably been. These properties are owned and managed by REITs.
REITs are a very underappreciated kind of investment in Malaysia. Despite the fact that they have been gaining popularity as an excellent defensive option for every portfolio over the past few years.
Because of their low-risk nature, as well as their high dividend return, they are ideal for beginning investors. Further advantages of Malaysian real estate investment trusts will be described further down.
Why You Should Invest in Malaysian REITs
You can get a lot of different things from REITs to help diversify your money. Your money is already spread out across a lot of different types of properties and also in different parts of the country when you invest in Sunway REIT. In Malaysia, your money is used to buy malls, hotels, and office space in a number of different states.
It would be possible for you to buy physical property on your own, but because of time and money constraints, you’d only be able to buy 3-4 properties at most. Which one sounds better to you?
Low Initial Investment
It doesn’t take much money to start your own real estate empire. You can invest in shopping malls, office buildings, warehouses, and even hotels for as little as RM1,000! But for better starting, you might wanna start with at least RM3k to RM7K so that you don’t have to pay for the brokerage fees,
90% Distribution= Huge Dividends
REITs will almost always give out at least 90% of their profits in order to take advantage of the tax system. That’s right, 90% of the rents from all those huge buildings will go to shareholders. People who invest will see a lot of money come back to them in the form of dividends. Stamp duty and RPGT are just two of the things that will save us money.
List of The Top 4 REITs in Malaysia
1. Amanah Hartanah Berhad (Annualised return: +6.57%)
AHB is a Shariah-compliant unit trust fund that invests mostly in commercial properties in the best parts of Malaysia. It was set up so that Bumiputera investors could be a part of owning prime commercial properties by owning units in AHB as unitholders.
An initial fund of 1 billion units is available to Bumiputera investors at a price of RM1.00 a unit. All Maybank and AmBank branches will be able to sell the units to them for that price.
AHB is under Pelaburan Hartanah Berhad (PHB) is an investment holding company that owns real estate. It is a subsidiary of Yayasan Amanah Hartanah Bumiputera, which is owned by Malaysians (YAHB). It was set up on May 8, 2006, to help more Malaysians own commercial real estate that is good for businesses.
Portfolio: Retail & Office
Address: Pelaburan Hartanah Berhad 200601013065 (732816-U) Level 9, Block D, Dataran PHB, Saujana Resort, Section U2, 40150 Shah Alam, Selangor Darul Ehsan
Contact: 603 7711 3000 / [email protected]
2. Axis REITs (Annualised return: +10.74%)
The first Malaysian REIT, Axis Real Estate Investment Trust, went public on Bursa Securities on August 3, 2005. In the Klang Valley, Johor, Penang, Pahang, Negeri Sembilan, and Kedah, the company’s 58 properties cover a wide range of needs and interests.
Warehouse and office space in prime locations are available with Axis-REIT, making it easy to find the right space for your company’s needs. Among the members of our facility management team are real estate specialists with advanced degrees, such as engineers, and other specialized building managers.
Portfolio: Industrial, office & warehouse
Address: Penthouse, Menara Axis No. 2, Jalan 51A/223, Section 51A, 46100 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Contact: 603 7958 4882 / [email protected]
3. Sunway REITs (Annualised return: +8.93%)
Assets are strategically positioned across award-winning integrated townships in key locations in Klang Valley, Penang, and Perak. Sunway Real Estate Investment Trust (Sunway REIT), one of Malaysia’s largest and most diverse real estate investment trusts (REITs).
As of July 8, 2010, Sunway REIT had a market capitalization of RM2.4 billion when it first appeared on Bursa Malaysia Securities Berhad’s Main Market. The market value of Sunway REIT as of 30 June 2020 was RM4.8 billion.
Portfolio: Retails, Office & Hotels
Address: Level 15, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan
Contact: 603 5639 9902 / [email protected]
4. Pavillion REITs (Annualised return: +10.68%)
Founded in Malaysia and other countries in the Asia-Pacific region, Pavilion REIT’s primary investment objective is to invest directly and indirectly in a diversified portfolio of income-producing real estate utilized primarily for retail purposes (including mixed-use developments with a retail component). Every RM1,000 invested in PAVREIT since 2011 has yielded RM1,550 in profit. Every RM1,000 would be worth RM2,760 if dividends were included.
In order to achieve a long-term increase in net asset value per unit, Pavilion REIT’s principal goal is to provide unitholders with steady and predictable distributions while maintaining a sufficient capital structure.
Portfolio: Retail, Office
Address: Pavilion REIT Management Sdn Bhd (939490-H), Level 10, Pavilion Kuala Lumpur, 168, Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia
Contact: 603 2118 8888 / [email protected]
Frequently asked questions (FAQ) of Real Estate Investment Trust (REITs)
Real estate investment trusts (REITs) are companies that own, operate or fund income generated on property. Generally, they can be classified as equity REITs and mortgage REITs.
Equity REITs are mainly the ownership, investment and operation of real estate. The main scope of Mortgage REITs is the Mortgage and loan of real estate.
By purchasing shares directly on stock markets or through mutual funds that focus on public real estate, you can invest in REITs.
A business must meet the following requirements to be considered a REIT: At least 75% of its assets must be allocated to real estate.
As REITs distribute 90% of their total taxable earnings as dividends to shareholders.