The Malaysian REIT development and their role in a portfolio

Abstract

This PhD research will examine the development, performance and impact of Malaysian REITs in the local, Asian and global REIT investment market; particularly focusing on Islamic REITs in Malaysia. This issue is important as REITs have emerged as a topic of considerable interest to the academic community, international investors, policy makers and the public at large; particularly with the recent significant development of REITs in Asia in recent years. The objectives for this research are: 1. To compare the structure and regulation of Malaysian REITs with other countries; both in Asia and internationally and differentiate the structure between Malaysian conventional M-REITs and Islamic M-REITs 2. To develop a Malaysian REIT performance index and a sub-sector Islamic M-REIT performance index and identify the impact of the Global Financial Crisis on Malaysian REIT performance by analysing the risk-adjusted returns performance for Malaysian REITs and Islamic M-REITs and analysing the portfolio diversification benefits of Malaysian REITs and Islamic M-REITs in a mixed-asset portfolio 3. To conduct an investment industry survey to identify the problems, challenges and the possible solutions relating to a successful Malaysian REIT market 4. To identify Malaysian REIT prospects by determining the strategy for its further strategic development and investor acceptance. In terms of portfolio diversification for the whole period of 8 August 2005 till December 2008, the overall M-REIT and Islamic M-REIT sector delivered strong portfolio diversification benefit. However, one should be cautious before concluding that Islamic M-REITs and conventional M-REITs have a smaller role in the mixed asset portfolio. Factors such as small sample bias as well as short study period (2½ years) should be taken into consideration. The survey results have revealed the key elements on the importance of the factors regarding the current performance and the ongoing success of M-REITs. For all three groups (property managers, fund managers and property advisors), the key points in which they have equal agreement on the importance of factors regarding the current performance of M-REITs are dividend growth and acquisition of new assets, while the significant risk factors regarding M-REITs is the level of borrowings. In terms of factors for the ongoing success, growth strategy is considered to be a significant factor, which includes professional management, acquisition of new assets, dividend growth and transparency in every aspect; especially in terms of regulation and finance. Overall, further research is clearly needed to further expand the understanding of REITs in Malaysia, their investment dynamics and investor appeal. With the expected future growth of M-REITs after the global financial crisis, this research will provide increased understanding of M-REITs in an investment portfolio. In particular, this understanding will also be relevant to the development of Islamic REITs, with the expected future growth in Islamic property investment products and opportunities globally.

Date of Award	2010
Original language	English