PETALING JAYA: The average yields that will be generated from Malaysian real estate investment trusts (REITs) this year is likely to remain at between four per cent and five per cent, given the property overhang in the country.
Manulife Asset Management Services Bhd chief executive officer Jason SM Chong, however, considered the yield growth as ''decent'' as it was still better than current fixed-deposit rates, which stood around three to four per cent per annum (p.a).
“But the yields of REITs in Malaysia is not likely to pick up in the near future as our present interest rate cycle (overnight policy rate) is expected to remain flat at the current level (of 3.25 per cent) amid the economic slowdown,” he told reporters here today after a presentation on global REITs and the launch of Manulife Shariah Global REIT Fund, the world's first Shariah global REIT fund that is available for retail investors.
However, Chong said e-commerce and Internet-of-Things-related businesses, as well as, healthcare sectors, would be the main drivers of global REITs performance.
“New economies are the backbone for increased infrastructure build-out demand, including data centres and telecommunication cell towers.
“While the world's ageing population would lead to the growth of medical centres and retirement homes,” he added.
Overall, Chong believed the outlook for global REIT remained promising, especially in markets like the United States (US), Hong Kong and Singapore.
”The US REIT market valuations are attractive and with dividend payouts near historical lows coupled with modest earnings growth expected over the next two to three years should lead to above average dividend growth,” he said.
As for Hong Kong REITs, he said the market offered attractive valuation and was seeing improving real estate fundamentals which favoured the retail sub-sector there.
“Singapore REITs offered above average dividend income and was a good insulator to macroeconomic uncertainty,” he added.
Chong also pointed out that the United Kingdom and emerging markets such as Mexico and Thailand, however, remained ''underweight territories'', with the former mainly dragged by Brexit concerns while the latter were affected by the less compelling risk-reward profiles.
Earlier in his presentation, Chong said S and P Global REIT's annualised return stood at 9.10 per cent p.a between December 2009 and December 2018, with capital returns taking up 4.62 per cent p.a while the remaining 4.48 per cent p.a was from dividend contribution. - Bernama