Malaysia REIT
REIT or Real Estate Investment Trust is a trust which invest in properties. REIT have been started in Malaysia as early as 2005 with Axis REIT being the first REIT listed on Bursa Malaysia.
Why REIT? In a life time, personally, we cannot afford to buy skyscraper office building. However, with REIT we can buy a share of skyscraper office building. REIT enable to us to invest in strategic and expensive property indirectly and without much management. Isn’t it solving our dilemma for investing in other type of property besides residential and retail property?
How REIT work? REIT invest property for rental income. The rental income collected will be distributed to the investor as dividend. The management will distribute at least 90% of the rental income to the investor. Besides rental income, REIT invested property will also appreciate in value in future. You might just consider REIT investing as property investing. We invest in property for its rental income and value appreciation.
How to invest? REIT can be buy through Bursa Malaysia just like stock. The management fee is deducted before paying out as dividend to investor. You can watch your REIT price on the newspaper or your online trading platform.
Withholding Tax (WHT)? Dividend received will be subject to tax according to the category. In Singapore, local investor are giving tax exemption compare to Malaysia which subject to 10% tax. Below are the subjected tax to different category of buyer.
REIT future? REIT is still an overlook investment by the market because REIT is a conservative investment. REIT didn’t fluctuate much in price over days. Therefore, investor tend to forget it. Bear in mind that, property will appreciate in times and so the REIT. Now, they are 11 REITs listed on Bursa Malaysia and another 2 more will be added in next year, SunCity and CapitaLand.
REIT is a good investment during inflation period, same like palm oil related stock or buying gold.
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Mrcoolku Reply:
October 12th, 2009 at 8:34 pm
I think it is still a good investment although not during high inflation period. The inflation period will double its value. It is a long term investment. I like REIT because of its high dividend and stable market price.
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Wong Mun Keong Reply:
November 12th, 2009 at 1:16 pm
Agree with you that SOME REITs are good even in general market condition.
REITs with low D/E ratios, high & consistent yearly ROE & ROTA % + buying them at a good price (DY >=8% and/or NAPS 30% lower than price) works in any market conditions IF we are willing to hold on to them like properties (though more liquid than real properties).
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Mrcoolku Reply:
November 12th, 2009 at 8:22 pm
REITs need to be hold for a long term. For this reason, I am not buying it first. I am looking for more volatile stock to invest because I am still young and can take more risk instead of REITs which is more stable but slower to appreciate.
Diversify even if we are young….
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