Malaysian REITs Performance Analysis Malaysian REIT Performance Analysis

Malaysian REITs Performance Analysis

Malaysian REIT Performance Analysis over
the period of study, presents the returns, risk and performance measures for
the conventional REITs and Islamic REITs. The data suggests that Sunway gained
the highest return (2.38%) by achieving lowest total risk (2.546%) and
systematic risk (0.072%) as compared to market portfolio. By using the Sharpe
and Jensen measurements, Sunway under-performed the market portfolio by -0.1841
and -0.0042 respectively. In terms of market capitalization, asset size, free
float and average daily turnover volume, Sunway could be deemed as the largest
Malaysia REIT. The benefits from the reputation and recognition of the Sunway
brand name could provide support to Sunway REIT as a sound investment portfolio
to investors. Rather the Islamic REITs performance measurements throughout the
full study period. The results indicate that the average return for all Islamic
REITs under-performed the market portfolio. The explanation to this result
could be Islamic REITs in Malaysia are not well recognized by many investors as
the only three Islamic REITs were listed on Bursa Malaysia. It can be consider
as new type of investment. The comprising Shariah principle of Islamic REITs
might lead to misunderstandings that Islamic REITs are meant for Muslim
investors. Furthermore, the small numbers of Islamic REITs does not seem able
to create sufficient buzz and interest of domestic and foreign investors.

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Malaysian REITs Performance Analysis
Pre-Global Financial Crisis

Malaysian REITs Performance Analysis
presents the returns, risk and performance measures for the conventional REITs
from August 2005 to August 2007 and Islamic REITs from August 2006 to August
2007, before GFC period. The results indicate that the ranges of the average
monthly return of all the REITs were very volatile. All REITs recorded positive
average return, except for Starhill, which experienced negative return of -0.01.
It is also contains the Islamic REITs performance analysis before GFC period.
Both Al-Aqar KPJ and Al-Hadharah Boustead under-performed the market in terms
of average monthly return. A possible explanation for this result is that the
Islamic REITs were established only two years prior to GFC, hence, it may not
have generated sufficient goodwill and confidence to investors. Furthermore,
Islamic REITs being new to the market then would have less uptake in the
market. In addition, both these Islamic REITs had higher total risk than the
market portfolio. Investors are unfamiliar with REITs will probably avoid
taking additional risk premium. Overall, all REITs offered volatile returns at
a higher level of total risk compared to market portfolio. The analysis of
monthly standard deviation shows that most conventional REITs provided higher
risk or at most, slightly lower than market portfolio risk.

Malaysian REITs Performance Analysis
during Global Financial Crisis

There are presents the returns, risk
and performance measures for the conventional REITs and Islamic REITs from
September 2007 to September 2008 during GFC period. The data suggests that
majority of REITs reported the worst monthly average return and at higher level
of risk performance except for Amanah Harta Tanah PNB and AmanahRaya. With the
exception of these two REITs, all the other REITs as well as the market index,
recorded negative returns during GFC period. Malaysia was badly affected by
GFC. Investors tend to not invest during crisis period due to the lack of
confidence in investments. Amanah Harta Tanah PNB and AmanahRaya were able to
generate positive return during GFC period, with 0.29% and 0.02% respectively.
Further analysis of Treynor, Sharpe, and Jensen measurements shows that Amanah
Harta Tanah PNB generated the highest value during GFC period. A plausible
reason is that the establishment of Amanah Harta Tanah PNB was the first REITs
to obtain the sponsor from Malaysian Government in year 2007. This could
improve the performance of AmanahRaya.

Malaysian REITs Performance Analysis
Post Global Financial Crisis

There are presents the returns, risk
and performance measures for the conventional REITs and Islamic REITs from
October 2008 to December 2010 for post GFC period. The data suggest that all
REITs reported positive monthly average return for post GFC period. Part of the
explanation is that Asian REITs started to recover from the global financial
crisis. Sunway experienced the highest monthly average return (2.38%) with the
lowest total risk (2.54%) and systematic risk (0.072%) as compared to the
market portfolio. Further analysis shows that Sunway out-performed the market
portfolio by using the Sharpe and Jensen measurements, -0.1841 and -0.0042
respectively. It can be argued that Sunway REIT is the largest REIT in
Malaysia. The diversified portfolio of Sunway REIT encompasses real estate in
hospitality, retail, and commerce sectors which gives significant benefit above
pure-play REITs. The diverse of properties will benefit from diverse sources of
income for both international and domestic investors. It can be said that
Sunway was the most profitable conventional REIT with the highest return and
lowest risk. Therefore, it is able to attract both international and domestic
investors to invest in Sunway REITs.