Listing of M-REITS

THE listing of AME Real Estate Investment Trust (AME-REIT), should have reminded some investors about putting their money into this asset class.

On the one hand, the rising interest rate scenario puts REITS in a tough spot.

Yield seeking investors now have more options such as bonds, fixed deposits and government securities.

On the other hand, some REITS could do well considering the opening of economies, especially when seen in light of the fact that Malaysian REITS (M-REITS), in general, have seen their share prices take a beating over the last two years.

So there could potentially be a share price re-rating for some M-REITS or at least improvement to prepandemic levels.

Also, under a high inflationary environment, REITS could be seen as a defensive asset class as other segments such as growth stocks lose their allure.

But some provisos.

REITS are also an indirect play on the property market, which as well-documented, still suffers from a significant oversupply situation.

Perhaps industrial REITS are a better option, especially those in the business of having well managed warehouses.

Some industry experts are predicting that due to the supply chain crisis that has beset markets for the last few years, warehouses are going to rise in demand as multinationals seek to create new supply hubs with local suppliers to ensure visibility of their supply base.

It is interesting to note that REITS listed in Singapore are also an attractive option for Malaysian investors.

Going by Bloomberg data, the average yields of M-REITS is at 6.41% while that of S-REITS are at 6.17%. Malaysian investors would also be gaining exposure to the Singapore dollar when buying S-REITS.