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Tuesday, 28 June 2011 03:37

Malaysia introduced REIT legislation initially in 1986 with amendements to the Companies Act 1965 and the Securities Industry Act 1983 permitting listed registered property trusts, but it was not until the the Securities Commission Guidelines on Real Estate Investment Trusts, and Guidelines on Islamic Real Estate Investment Trusts (Islamic REITs), in 2005 that the market developed. Islamic REITs are a first of their type and 'shariah-compliant' whereby the REITs cannot invest in casinos, etc. All Malaysian REITs must pay out at least 90% of their net profit to unit-holders to be exempt from taxation; invest at least 50% of assets in real estate (but no more than 25% in cash or other funds); are exempt from Stamp Duty; must have a trustee, and managers who are 'approved' companies; cannot sell more than 70% to foreigners, and the 'sponsor' cannot hold more than 70%; and have at least RM100m in assets. Foreigners must pay 20% with-holding tax, and interestingly, landlords who sell to listed REITS are exempt from Capital Gains Tax.

 

 

 

 

The history of the Malaysian REIT (M-REIT) industry dated back to the establishment of listed property trusts (LPTs) in 1989. However, it was not until 2005 that the Securities Commission of Malaysia (SC) issued the Guidelines on Real Estate Investment Trusts (ordinary M-REITs) and Guidelines for Islamic Real Estate Investment Trusts (Islamic M-REITs), providing the principal legislations governing the official establishment of REITs in Malaysia. Both types of M-REITs share similar regulatory structures and requirements, except that the Islamic M-REITs have to comply with the Sharia requirements. Malaysia was the first country to introduce guidelines for Islamic REITs at that time (Newell & Osmadi 2009). As of June 2012, there were 15 M-REITs listed on the Bursa Malaysia (MYX), with a total market capitalisation of US$5 billion (Table 0.8). This saw Malaysia being the fourth largest REIT market in Asia. However, the REIT industry in Malaysia was still relatively small as compared to those in Japan, Singapore and Hong Kong. Three of the largest M-REITs; Pavilion REIT (US$1.14 billion), Sunway REIT (US$1.09 billion) and CapitaMalls Malaysia Trust (US$839 million), were among the top 50 REITs in Asia in terms of market value. The three Islamic M-REITs were Axis (US$390 million), Al-Hadharah Boustead (US$351 million) and Al’Aqar Healthcare REIT (US$274). The number of properties in M-REIT portfolios ranged from 2 to 29, averaging 10 properties.

Source: Prof. Alex Anh Khoi Pham - University of Western Sydney: The Development of REIT Markets in Asia (1/1/2014) - Link.

 

Last Updated on Friday, 14 March 2014 06:07