KUALA LUMPUR: Ministry of International Trade and Industry deputy minister Liew Chin Tong has suggested that old vacant Kuala Lumpur building areas be repurposed for housing, starting with those owned by government-linked companies.
Liew was speaking at the Malaysian Real Estate Investment Trust (M-REIT) Forum held on Sep 10, 2024 hosted by the Malaysia REIT Managers Association.
During his keynote address, Liew encouraged REIT players to consider joining this initiative to address housing challenges in Malaysia.
CIMB Securities in a note today said expert speakers at the conference expressed optimism about the industrial sector due to strong demand for data centers and high-tech warehouses but identified some challenges within the office sector.
"Panelists were cautiously optimistic about the office sector as employees return to office environments, expecting higher rental rates for prime office spaces. However, they projected poor occupancy rates for "Grade C" office buildings (or older properties with limited amenities and rather basic infrastructure) with the opening of TRX and Merdeka 118 office buildings.
CIMB Securities said investors of REITs typically seek stable and sustainable growth; high yields exceeding those of Malaysian Government Securities; a certain market cap size that offers shares liquidity; long-term growth prospects and environment, social and governance (ESG) initiatives.
Panelists indicated that the general expectation for REIT total returns is about 10 per cent per annum, and investors typically prefer REITs to focus on local assets and pay regular dividends.
CIMB Securities said the average FTSE ESG score for the REIT sector was 2.7, which is below the benchmark inclusion score of 2.9 for the FTSE4Good Index.
"This indicates that there is room for REIT players to enhance their ESG practices," it said.
CIMB Securities maintains its "Neutral" rating for the REIT sector, with its key picks being IGB REIT and Sunway REIT.