Here are five reasons why you should invest in REITs in Malaysia:
1. Small starting capital
Most property investments require a significant amount of money to start. Even with 90% loan, a RM500,000 property would require at least RM50,000 down payment plus extra for legal fees and stamp duties. For MREITs, you can start investing with as little as RM100 (100 shares of Al-Salām REIT at RM1.00).
2. Get exposure to the top shopping malls and commercial buildings
With MREITs, you will be able to buy into the top shopping malls in Malaysia. Malls such as KOMTAR JBCC (Al-Salām REIT), Pavilion (Pavilion REIT), MidValley Megamall (IGB REIT), Sunway Pyramid (Sunway REIT) are all available on Bursa Malaysia. As an individual property investor, you would have little chance of owning such popular shopping malls, other than certain strata title types like Berjaya Times Square. With MREITs, your dream of owning a part of these popular commercial properties can be a reality.
3. Earn regular dividends
Like property rentals, MREITs also generate income in the form of dividends. Since MREITs are usually diversified, vacancy rates are generally low so they are a more stable form of income as compared to physical properties which could have vacancy periods. The frequency of dividends payout for REITs is quarterly or bi-annually, making them an ideal investment for retirement income. To make it even more attractive, the dividend payout for REITs tend to be pretty high as they need to pay out at least 90% of their net income to be eligible for tax treatment.
4. Ease of buying and selling MREITs
As MREITs are exchange traded, buying and selling them is generally easier compared to physical properties. MREITs are bought and sold like normal stocks so the prices are transparent and the transactions take place instantly. For property transactions, it is normal to take between six to 12 months at least to find the right buyer at the right price and go through the sales and purchase agreement (SPA) process.
5. Minimal effort required
One of the key advantages of MREITs is that there is minimal effort required to maintain these investments. MREITs hire professional management teams to manage the tenants and upkeep of the properties, leaving you to enjoy the fruits of your labour. Anyone familiar with property investments will know that there is in fact a lot of work involved in managing your own properties.
At current market condition, dividend yields of most MREITs are pretty attractive income and quality of the properties, MREITs are generally good investments to consider.