KUALA LUMPUR: THE local stock exchange could see an increase in Real Estate Investment Trust (REIT) listings, offering a promising opportunity for investors seeking stable and lucrative investments.
REITs provide diverse portfolios spanning sectors such as retail, office, industrial, and hospitality, effectively reducing risk and insulating against market volatility in any one sector.
Analysts predict that more property developers in Malaysia may turn to REIT listings.
RHB Research noted that this trend is likely to continue, especially as declining interest rates generally benefit REITs, particularly for companies with a substantial pool of investment properties.
Among the developers eyeing REIT listings are IOI Properties Group Bhd (IOIPG) and SP Setia Bhd.
According to RHB Research, IOIPG has a strong portfolio of retail, hospitality, and office assets valued at around RM20 billion, including properties in Singapore, while SP Setia holds retail and office assets worth about RM1 billion.
The firm said that high-quality asset monetisation through REITs is usually seen positively, with shareholders expected to benefit.
Sime Darby Property Bhd is also seen as a strong candidate for a REIT listing.
RHB Research highlighted the company's growing investment property portfolio, which many investors may have overlooked.
Sime Darby Property has built a significant cache of retail assets, including KL East Mall, which now yields 6.5 per cent to 7.0 per cent after three to four years of operation, Senada Mall, set to open in the second half of 2025, and Elmina Lakeside Mall.
In the logistics sector, Sime Darby Property's Metrohub in Bandar Bukit Raja is gaining momentum.
Metrohub 2 is complete, with tenants Comone Express and JD Logistics occupying 25 per cent of the 800,000 square feet space, with room for expansion.
Meanwhile, Metrohub 1, expected to complete by the fourth quarter of 2024, has already secured 50 per cent occupancy, covering 1.1 million square feet of net lettable area (NLA).
By the first half of 2024, Sime Darby Property had accumulated 7.7 million square feet of NLA in investment properties, two million of which are industrial properties.
RHB Research valued the company's total assets under management at RM2.6 billion (excluding concessions) as of fiscal year 2023.
The completion of the Google Data Centre (DC) in 2026 is expected to further enhance Sime Darby Property's asset portfolio by an additional RM1.5 to RM2 billion.
The company's property investment, leisure, and hospitality segments currently generate an annualised revenue of approximately RM220 million, RHB Research said.