PETALING JAYA: Real estate investment trusts (REITs) are anticipated to adopt strategies that will enable them to respond to shifting market conditions, reinforce their portfolios and sustain investor confidence in the face of ongoing geopolitical uncertainty.
An analyst said he expects REITs to be more proactive with their asset management, in light of the current global uncertainties.
“Success depends on continuously improving property value. This involves upgrading older buildings, refining tenant selection and enhancing customer experience – especially for retail spaces that must remain attractive and relevant,” he told StarBiz.
Additionally, he said REITs will need to continue securing reliable tenants to maintain profitability.
“Stable income comes from strong tenant relationships. REITs focus on leasing to financially sound tenants, maintaining high occupancy rates and securing longer lease agreements to ensure consistent cash flow.”
Another analyst said it will be “commonplace” to see local REITs leverage technology and manage finances prudently.
“Digital tools can improve efficiency and decision-making. These include smart building systems, data analytics to understand tenant behaviour, as well as digital platforms for tenant engagement.
“Additionally, maintaining a healthy financial position is essential. This includes controlling debt levels, managing exposure to interest rate changes and ensuring steady dividend distributions to investors.”
He added that it also “won’t be surprising” to see REITs diversify their assets.
“REITs should avoid overdependence on a single asset class. A balanced mix, such as retail, office, industrial, logistics, hospitality and healthcare properties, helps reduce risk.
“Expanding across different locations can also improve resilience.”
Axis-REIT, under the manager’s discussion and analysis segment of its annual report, said it expects sustained demand for modern, strategically-located industrial properties.
This is amid continued investments into the manufacturing and logistics sectors, as well as the emergence of new, high growth sectors such as data centre properties, it said.
“This will be driven by constructive government policies and targets that will grow strategic sectors and strengthen the development of industrial ecosystems.”
Axis-REIT highlighted that it will maintain its medium-term target of growing its assets under management to RM10bil by the end of 2030.
“Toward this goal, we will continue to seek yield-accretive, value enhancing portfolio opportunities, particularly in high-growth sectors and key industrial hubs throughout Malaysia that align with our geographic strategies.
“We will also evaluate opportunities in emerging high growth areas that will inject diversity and enhance the resilience of our portfolio, ensuring that such prospects align with our strategic focus, sustainability considerations, and risk parameters.”
Axis-REIT added that it will maintain prudent capital discipline to ensure it has sufficient liquidity to meet the capital requirements of its growth targets.
“This will include increasing our exposure to sustainable financing, and exploring the possibility of establishing a framework for green or sustainability-linked sukuk issuances. We will also assess other financing avenues and engage a broader pool of potential investors to increase foreign investor participation in the fund.”
Amid the rapid evolution of technology, Axis-REIT said it will take a measured approach in leveraging digital solutions to stay ahead of market and operational developments.
The REIT said it would also enhance data driven decision-making and optimise resource utilisation across its operations.
“In exploring the opportunities presented by new technology, we will remain mindful that any risk exposure, such as cybersecurity threats, data privacy concerns, and system reliability, remain within tolerable limits.
“Recognising that sustainability expertise is critical to our long-term success, we will continue to strive to attract, retain, and upskill our talent pool, equipping employees with the required knowledge and capabilities.”
Meanwhile, KLCCP Stapled Group chief executive officer Datuk Mohd Salem Kailany is remaining optimistic on its outlook and believes the year ahead holds significant promise.
“Visit Malaysia 2026 (VM2026) is set to drive tourist arrivals, enhancing the country’s international visibility.
“The group will tap fully into the potential of shifting some of the spotlight onto the KLCC precinct with events that reinforce our role as a premier destination for business, leisure and major gatherings,” he said in the group’s annual report.
KLCCP Stapled Group comprises KLCC Property Holdings Bhd and KLCC-REIT.
Mohd Salem noted that with the opening of Ombak KLCC, the new art and cultural hub under its holding company, KLCCP Stapled Group’s ecosystem will expand further – creating new touchpoints for Malaysians and visitors alike and deepening the precinct’s role as a dynamic, integrated destination.
“Beyond VM2026, our focus remains unchanged. Disciplined execution to preserve portfolio value, maintaining the confidence of our investors as well as tenants, while winning the hearts of our guests and customers. We remain committed to accelerating our growth and will assess opportunities as they arise based on alignment with our strategies as well as our disciplined approach to capital management.”
Meanwhile, the removal of the 10% withholding tax for the 2026 tax assessment year for local REITs from April 1 – has certainly set tongues wagging.
Hong Leong Investment Bank (HLIB) Research in a recent note pointed out that the revised regime introduces a progressive tax structure for resident investors, resulting in asymmetric outcomes across income groups.
“While lower-income resident investors (below RM100,000) may benefit from effective tax rates below the previous 10% level, higher-income residents face a sharp increase, with effective tax rates rising to 20% to 30%.
“Given that a significant portion of the investable base is subject to higher effective tax rates, the overall impact is skewed negatively, in our view.”
As such HLIB Research said the efficiency of yield transmission will decline, with investors retaining a smaller portion of incremental yield relative to previously, particularly for those in higher tax bands.
“This suggests a larger near-term adjustment in headline yields may be required during the repricing phase, although yields are expected to stabilise over time.”
