Performance Analysis Of Reits In Malaysia And Uk Finance Essay

Securities Commission of Malaysia defines REITs as ”an investing vehicle that proposes to put at least 50 % of its entire assets in existent estate, whether through direct ownership or through a individual intent company whose chief plus comprise existent estate ” . Shares of REITs company are publically traded in major stock exchange and it is viewed as a good manner for investors to have a belongings indirectly by having the portions of the belongings. It would besides be the lone manner for ordinary investors to hold the chance to put in big scale commercial belongingss.

REITs normally bring forthing income by owned and runing income bring forthing existent belongings such as offices, shopping centres and service flats. Meanwhile it may put in existent estate-related securities, hard currency or fixed sedimentation and whole loans. However, most of the earning of a REIT company is produced from the recurrent rental incomes of the existent belongingss owned. The unit holders of REITs will have return in the signifier of dividends from the net income of the REITs generated. Due to the stable flow of incomes, it is considered as a lower hazard investing tool to the investors.

REITs are considered to be under the class of unit trust financess which are being professionally managed. The administration construction is likewise for both REITs and unit trust financess. Experienced existent estate professional would be appointed as the direction squad of REITs which must be headed by a registered valuer to pull off the investing and operations of REITs. It would be the same as unit trust financess where other than the direction company, a professional fund director will choose and manages the investing. The direction squad of REITs are accountable both to their board of managers every bit good as the stockholders of the REITs.

REITs are viewed as the best combination of investing in existent belongings and stocks. Investing in REITs by purchasing the portions of REITs would supply the investors a manner to cut down loan and involvement paid to have a belongings as investing. The return is so lower so stocks but would be more stable as it generates stable incomes to REITs. This is the unique of puting in REITs and consciousness of this profit-driven investing tool is risen and advancing the growing of REITs in many states.

This investing tool has a long history in United State and Australia which had accomplishing stable market and growing over the past 10 old ages. REITs had start going popular and accomplishing growing in many of the South East Asia states in recent old ages, for case, Singapore and Japan. REITs are considered as a new construct in Malaysia since 2005, which is the transmutation from belongings trust fund. Securities Commission as the nucleus regulator of all the unit trust financess and REITs are responsible in supervising development of the industry. This statutory organic structure had issue new guideline for REITs on the 3rd January 2005 to replace the old regulation for Property Trust Funds. The issue of the new guideline was so advancing the REITs due to the one degree revenue enhancement.

background of survey

The REITs market different from states to states, every bit good as the deciding factors of the public presentation of REITs in the specific market. Regulation may be the nucleus factors in this context. Undeniably, other several factors for case belongings market clime of the state may in fact influence the public presentation of the REITs for the state.

REITs market was success in many several states, particularly United State which had matured in the REITs market. Many states start presenting the REIT government and seting attempt to develop this industry as it was one of the valuable investing to the state. United Kingdom was one of the states which were freshly entered into the REIT government. The REIT statute law was introduced by the United Kingdom authorities at the 1st of January, 2007. Interestingly, within two old ages of the operation, the UK REITs market had achieve to the ranking of Forth in footings of their REITs market capitalization, which was about US $ 41 million ( Global REITs Report 2008, Earnst & A ; Young ) . In fact, United Kingdom have their ain manner of REITs ordinance, long period of clip was used by the UK authorities in audience to present the most suited statute law for REITs.

There are many other factors which may lend to the a growing of REITs in UK. The different in pull offing their investing portfolio of REITS Company of United Kingdom and the execution of some specific ordinance for REITs in United Kingdom may be the implicit in grounds for the growing of REITs. These factors which influenced the public presentation of UK-REITs will be explored in this survey. Yet, before this could be transporting out, public presentation analysis will foremost be done to hold better index of the undermentioned survey. This survey may research the unique of the UK-REITS and at the same time compare with Malaysia context for farther recommendation.

aim of the survey

To analyze the construct, mechanism and ordinance of REITS in Malaysia and United Kingdom

To analyse and compare the public presentation of the selected REITS of Malaysia and United Kingdom

To place the factors which contribute to the discrepancy of public presentation as to the M-REITS and UK-REITS.

Scope OF survey

This survey will be focused on the public presentation of M-REITS and UK-REITS. Three largest Real estate investment trust of both states will be chosen for the public presentation analysis. The REITS company chosen must besides be listed in their several stock market, i.e. be listed in Bursa Malaysia for M-REITS and London Stock Exchange for UK-REITS.

The aggregation of informations for this survey lay between the timeframe of 2007 to 2009. This is due to the ground that REITs of United Kingdom was introduced on the 1st of January 2007.

reseach methodological analysis

Quantitative method will be adopted as the research methodological analysis. Relevant statistics, graphs, charts obtained will be analyzed in order to compare the variant public presentation of the selected REITs in UK and in Malaysia. The informations can be pull outing from the one-year study of the REITs company, Bursa Malaysia, London Stock Exchange and on-line database.

Secondary beginnings will be considered every bit good, for case, articles, diaries, research documents, mention books and the guidelines for REITs published by the Securities Commission in Malaysia context and the guidelines and ordinance in United Kingdom context.

significance of the survey

This survey intended to benchmark the public presentation of REITs in Malaysia with United Kingdom. Through the analysis, betterments in footings of belongings portfolio direction, ordinance and investing way could be done to accomplish better public presentation of Malaysia REITs market. Investors every bit good as the directors of the REITS industry may profit from this survey which provides item information and public presentation of selected REITS. Investors may hold better information of the REITs market whether in Malaysia or United Kingdom, which may assist while doing determination of the investing in any REITs. Furthermore, the mechanism and ordinance of REITS discussed in literature reappraisal will profit new investors of REITS.

restriction of the survey

This survey will be focus on three largest Real estate investment trust of both Malaysia and United Kingdom. The analysis could merely be done for a limited figure of REITS due to clip restraint. Complexities and diversenesss could be reduced significantly while limited to few Numberss of REITs. This survey would besides restrict to the selected listed M-REITS and UK-REITS as at 31st December 2009.

Structure of the survey

In first chapter, a brief debut of the subject of research is given. The background of the research is introduced by explicating the grounds of taking this subject as research subject. Subsequently, the statement of research jobs, aims of the survey, range of the survey, research methodological analysis, significance of the survey, restriction of the survey and construction of the survey are identified and explained in sequence in chapter 1.

Second chapter will be the literature reappraisal of the research subject. Diaries, articles, mention books will be utilizing as beginnings of the literature reappraisal for farther apprehension of the REITs market and mechanism as in United Kingdom context. Detail of the REITs related regulations will be discussed in item for both Malaysia and United Kingdom.

The 3rd chapter will explicate the methodological analysis of this research. The types and beginnings of informations to be collected will be specified in inside informations. Furthermore, the footings used in analysing the public presentation of REITS will be identified and elaborated explicitly.

Chapter four is the presentation of the analysis of findings and treatment. The public presentation and the belongings portfolio of the selected REITs will be analyzed. The background of the REITs company will be analyzed every bit good for farther apprehension of the nature of the selected REITs. Comparison survey will subsequently presented between REITs of Malaysia and REITs of United Kingdom.

Finally, chapter 5 will be the decision of the survey based on the analysis done. The statements which arisen throughout the research will be summarized. In add-on, suggestions and recommendations will be given for farther research intents.