If you’re in your 20s or 30s, you’ve probably heard enough of “just save up and invest in properties lah” from your elders.
However, for most people, getting into property investment is a pipe dream, especially with homes costing a bomb these days. Many Malaysians are unable to afford a home to live in as is, let alone for investment. So, is there really an alternative way for a regular Joe in Malaysia to invest in properties?
Yes there is: REITs!
What are REITs?
Short for real estate investment trust, REIT provides the opportunity to many small-time investors to pool their funds together to invest in properties, such as commercial buildings, hotels, malls, and more at a very affordable price.
What separates REITs from investing in traditional real estate is that you can buy REITs on the stock exchange, just like regular stocks. Therefore, investors can enjoy diversifying their investment portfolio without being held down on a long-term basis. In addition, REITs shares are incredibly easy to liquidate as they can be bought and sold quickly.
With all the investors pooling their capital together, REITs allow normal people to purchase real estate that wouldn’t usually be able to afford e.g. commercial, industrial, and retail properties.
How does investing in REITs work?
First off, you start by buying a minimum of 100 shares on Bursa Malaysia. REITs are perfect for beginner investors as anybody can give it a go. If we just take a look at Amanah Harta Tanah PNB (AHP) REIT, where 1 unit costs RM0.75 on Bursa Malaysia, purchasing 100 shares would make your investment capital only RM75!
What are your options, you ask? Allow us to show you all 18 REITs listed on Bursa Malaysia:
| Real Estate Investment Trust (REIT) | As listed on Bursa Malaysia |
|---|---|
| Amanah Harta Tanah PNB | AHP |
| Al-`Aqar Healthcare REIT (Syariah-compliant) | ALAQAR |
| Al-Salam REIT (Syariah-compliant) | ALSREIT |
| Amfirst REIT | AMFIRST |
| Amanahraya REIT | ARREIT |
| Atrium REIT | ATRIUM |
| Axis REIT (Syariah-compliant) | AXREIT |
| Capitaland Malaysia Mall Trust | CMMT |
| Hektar REIT | HEKTAR |
| IGB REIT | IGBREIT |
| Kip REIT | KIPREIT |
| KlCC Property Holdings (Syariah-compliant) | KLCC |
| MRCB-Quill REIT | MQREIT |
| Pavilion REIT | PAVREIT |
| Sunway REIT | SUNREIT |
| Tower REIT | TWRREIT |
| UOA REIT | UOAREIT |
| YTL Hospitality REIT | YTLREIT |
Other than the low investment capital needed, why should I invest in REIT?
- REITs are managed by professionals
As mentioned above, everybody can get into REIT, and we meant it. When investing in REITs, your investment will be completely managed by professionals, leaving you to sit back and enjoy the fruits of your labour.
Unlike investing in a physical property, REIT management teams manage the tenants and the upkeep of the properties, so say goodbye to difficult tenants, home loans, house hunting – the works.
- Low risk, high reward
Since REIT distributes at least 90% of its earnings to unitholders, the dividends enjoyed by investors are between 5% to 7% with payouts made every 3 months of twice a year, depending on the REIT fund manager – much higher than most rental properties where the return is typically only between 3% to 5%.
The returns from REITs are also much less volatile compared to other markets as REIT uses property rentals as its main source of dividend yields. Thus, as long as the properties you invest in has tenants, dividend rates will remain stable. However, do keep in mind that unlike fixed deposits, REITs do come with its own risks and returns are not guaranteed, so be sure to do your research!
How do you get your payout?
As REITs are listed on Bursa Malaysia and has high liquidity, you do not have to endure tons of procedures and suffer through a long wait to convert your assets into cash. Unlike investing in a house, REIT shares can be converted into cash in less than a day. All you have to do is click on ‘sell’ on an online trading platform and the amount based on the number of REIT units sold will be credited right into your account!
How do I invest in REITs in Malaysia?
Let us show you 4 simple steps to kick off your REIT investing journey:
Step 1: Select a brokerage firm
You can make your decision buy browsing the Bursa Malaysia website. From there, you’ll be able to make your choice based on the brokerage fee, ease of transaction, whether it is Syariah-compliant, and how user-friendly the online trading platform is.
Step 2: Open a trading account and CDS account with your broker
Once you’re done selecting a broker, just meet up with your broker to open these account. You’ll then be asked to provided documentations, such as copies of your IC, bank account statements, and more.
Step 3: Add funds into your trading account
After waiting a few days to gain access to your newly-activated account, just put funds into the online trading platform based on your financial ability.
Step 4: Start investing!
Now that you’re set to go with funds in your trading account, you may start buying and selling shares on Bursa Malaysia!
Good luck on your REIT journey, folks!
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