The main motivation of the study is to find out the difference between Malaysia Real Estate Investment Trusts (REITs) by comparing with Singapore whilst improve Malaysia REITs. Singapore as a developed country in REITs market is possible to act as a learning mirror for Malaysia to improve REITs.
Listed Property Trusts (LPTs) had a long history in Malaysia since 1989. As a predecessor of Malaysia REITs, the performance is not satisfaction for the investors. It is not attractive by local or foreign investors due to thin trading volume, small size of LPTs, lower capital appreciation, historical returns, dividend yield and returns fluctuation. It has changed become Malaysia REITs at 2005 and has a better performance than LPTs.
However, there are some differences when comparing the REITs markets between Malaysia and Singapore. Singapore developed REITs at 2002. In less than 10 years, Singapore REITs has become one of the most important REITs in the global REITs market and doing well regarding to REITs regulation, property market and REITs opportunity.
Therefore, the scope of this research is to find out the difference on REITs between Malaysia and Singapore, comparing the differences and find out which markets are more attractive for investors. Then, the way to improve Malaysia REITs by comparing with Singapore REITS will be discovered and make the market become more attractive for local investors and foreign investors.
The purpose of this research is to learn some ideas from a well developed country such as Singapore for Malaysia REITs. This will benefit not even for the investors but the REITs companies and as a long term, for property market and economy in Malaysia.
Acknowledgement
In completing this piece of research I should like to acknowledge the kind assistance of the following people;
My dissertation supervisor, Lulu Wang, whose critical guidance and endless archives of knowledge allowed me to achieve a competent topic of study and appropriately structure my findings.
Those respondents who had participated fill in the questionnaires which had been sent through online.
Those people who give me a hand on research and writing or encourage me while my hardest time. It will keep in my eternity memory.
And last but not least, my family for being more than supportive and motivating me through the tough time while readying this dissertation.
List of abbreviations
REITs: Real Estate Investment Trusts
SREITs: Singapore Real Estate Investment Trusts
MREITs: Malaysia Real Estate Investment Trusts
YTD: Year-to-date
MAS: Monetary Authority of Singapore
LPTs: Listed Property Trusts
KLSE: Kuala Lumpur Stock Exchange
SEA: South East Asia
QOQ: Quarter-on-quarter
P/E: Price/Earning
ROE: Return on equity
i.e.: Id est
etc
APAC: Asia Pacific
Abstract
Singapore REITs has developed and became one of the most important markets in global for less than 10 years. Contrary on Malaysia, LPTs had a long history in Malaysia but not attractive for investors. LPTs had been changed to REITs in 2005. By changing the regulation of the LPTs, it had successfully made REITs become more attractive. Therefore, this research is going to find out the difference between Malaysia and Singapore REITs. Based on the differences, let the investors choose whether which markets are more attractive for them and gave some suggestion on improvement at Malaysia REITs.
To research on this topic, a quantitative research method with positivist philosophy and deductive approach had adopted. An online questionnaire had been distributed to 70 investment professionals in Malaysia and received approximately 58.5% response rate.
Based on the results from the questionnaire, most of the investors preferred the REITs style of Singapore rather than Malaysia. Therefore, the hypothesis is found to be true. In addition, some suggestion had suggested by the investors in order to improve the Malaysia REITs. Some ideas such as more incentive for investors, soften the regulation on REITs, create more opportunities for REITs especially on Islamic REITs will be the ways to improve Malaysia REITs.
As a conclusion for this dissertation, Malaysia REITs is less attractive than Singapore REITs. However, Malaysia REITs may change become more attractive if they made some improvements on the REITs market. It will possible to attract more investors to invest in Malaysia REITs.
Key words:
Real Estate Investment Trusts
RETIs performance
REITs regulation
Risks of REITs
Benefits of REITs
Type of REITs
Singapore REITs
Malaysia REITs
The scope of the research
The dissertation is going to research - between REITs market in Malaysia and Singapore, which is preferable by the investors and find out the way to improve Malaysia REITs.
REITs market in Asia had growing and expanding rapidly with significant performance within few years. Asia's REITs are strong enough to compete with United States of America (USA) or Europe countries due to the unique regulations and structures. Research by the Trust company regarding to Asia-Pacific REITs has proved that Singapore ranked the first in the overall REITs for institutional investors in Asia-Pacific regarding to regulatory support of REITs, property market and REITs opportunity. However, Malaysia had ranked at the middle in Asia-Paicfic.
Singapore had developed REITs since 2002. From that time on, the government has kept changing the regulations to attract more REITs company listed in Singapore stock market. Even the company in China, CapitalRetail China Trust (CRCT) which hold Chinese properties, are listed in Singapore stock market. In addition, with the incentives offer for the investors, it had successfully pushed the Singapore REITs market becomes one of the important REITs in global.
The reason for this research is because Malaysia REITs is not as developed as Singapore since it had a long history in stock market which starts from LPTs. Malaysia REITs has been growing slowly and been classified as an emerging market for REITs. The investors could not enjoy the developed REITs market as Singapore. That's the reasons to research this dissertation and find out which markets are preferable by investors and the difference on REITs between Malaysia and Singapore whilst improve it.
In the literature review, it had discussed few points which are affecting the investors on choosing REITs. The benefits and risks are come along while investing in REITs. The investors may choose the REITs market which they are more acceptable and attractive. In this case, by comparing the benefits and risks of Malaysia and Singapore REITs brings along for the investors, will possible to find out which market is preferable for the investors. Besides, find out the way to improve Malaysia REITs. Questionnaire will be using to test which markets are preferable for investors and the way to improve Malaysia REITs.
With the growing of REITs, it will make the property market become more active and attractive for investors. Moreover, as a long term, property market will increase value and will push up the economy in Malaysia. Therefore, improving REITs market in Malaysia is necessary.
Research goals
The aim of this dissertation is to find out the difference between Singapore and Malaysia REITs whilst improve Malaysia REITs.
Objectives:
To use literature to identify what features/issues attracts and deters investments in REITs.
To use literature to identify the nature and extent of investment in Singapore and Malaysia REITs to compare their characteristics and performance. This will involve looking at issues such as:
Regulatory support
Local property market performance and transparency.
REITs opportunity in each country.
To improve the REITs in Malaysia
Hypothesis:
REITs listed in Malaysia are less attractive to investors than those listed in Singapore.
The parameters to the study
This dissertation will discuss on improving Malaysia REITs by comparing with Singapore REITs only based on regulation, property market and REITs opportunity. Compare with other country could be used as ideas for further research. This literature review will provide a broad study of the core difference regarding to the REITs market between both countries.
The outline of research method
This dissertation can be separated into two parts, which is literature review and questionnaire. For the literature review, it was researched since 5th June 2010 and spent almost 2months to finish. Books had been using mostly came from the library of Northumbria University while the journals were gathered from Nortumbira University's database NORA. Lots of key words been generated to make the research easier such as Real Estate Investment Trusts, REITs performance, types of REITs, benefits of REITs and risks of REITs. From the literature review it gave the answers on objective 1 and outlines the difference between both markets which answers the objective 2.
For the questionnaire, it was take part after the literature review. By using 'Survey Monkey' online questionnaire, it is convenient to send out the questionnaire through online media. The questionnaires are meant to research which markets are more attractive for investors and the way to improve Malaysia REITs by comparing with Singapore REITs.
The limitations to the research
In this dissertation, the target respondents for the questionnaire are local investors. Nevertheless, due to the time restriction and the difficulty in contacting foreign investment professionals comment on Malaysia REITs, the comments on improving Malaysia REITs are limited at local market only but not foreign investors.
The structure overview of the dissertation
There is five chapters includes in the dissertation:
Chapter 1: Introduction
This chapter clearly defines the area being investigated which includes scope of research, research goals (i.e. aim, objectives, and hypothesis), the parameters to the study, the outline research method, and the limitations to the study and at last the dissertation structure overview.
Chapter 2: Literature Review
This is the preliminary stage of information gathering and data acquisition. The purpose of this method is to get sufficient knowledge and understanding of the REITs market between Malaysia and Singapore. With the result of gathering data from various areas, it shall be introduced the definition of REITs, the benefits of REITs and the risks of REITs. Besides that, the literature review is carrying out the developed REITs market in global and Asia. Literature review also carried out for the most important part of dissertation, which is the different of market regarding on regulations, property markets and REITs opportunity between Singapore and Malaysia. All of the information would assist on further research, which is questionnaire.
Chapter 3: Research Methodology
In this chapter, the methods which used to investigate the problem will be discussed. Furthermore, the way to collect data and tools will be covered. Besides, scope of the research, research aim and objectives will be reminded again to assist on choosing the proper research method that suit the dissertation.
Chapter 4: Research findings and data analysis
This chapter will express the findings very clearly using text, tables, charts and graphs. Besides, an overview of the findings, a descriptive analysis of the results, and an examination of the correlations in the data had been included. The data will be analysed and test the hypothesis developed in the literature review.
Chapter 5: Conclusion
This chapter will link the theoretical strands of the dissertation together, and appraise the appropriateness of research goals and research method. Besides, further recommendation of potential research will included.
