Malaysia - Commercial Properties & REITs

[winston]

The 18th entry

By PANKAJ C. KUMAR

Recent reports have suggested that the office sub-sector is facing some form of glut, not only driven by the pandemic and business closures or scale down of operations, especially with the culture of working from home, but also due to the sheer size of the incoming office supply.

From the National Property Information Centre (Napic), for the the first half of 2021 showed occupancy rate of purpose-built office (private) in Kuala Lumpur fell to 72.2%, down 3.6 percentage points from the first half of 2020 rate of 75.8%.

Data also showed that some 70 office buildings within Kuala Lumpur or approximately 17.1% of all buildings have a vacancy rate in excess of 50%.

A year ago, this figure was 63 buildings or 15.7% of the total number of buildings.

For the record, Kuala Lumpur alone has some 2.54 million square meters of available space and that represents 50.1% of Malaysia’s total vacancy of 5.07 million square meters as at end of the first half of 2021.

Source: The Star

https://www.thestar.com.my/business/bus ... 18th-entry

[winston]

Office REITs ‒ Malaysia
Evolving Landscape − New Environment Post Pandemic?

The pandemic has forced most businesses to evolve and could give the functionality
of offices a slightly different meaning.

With this as a possibility, coupled with the future incoming office space of >4m sf, tenants will look at quality and affordability.

As such, assets in strategic locations will continue to be resilient.

Our top pick is Sentral REIT for its stable occupancy, resilient earnings and attractive dividend yield of at least 8%. Maintain OVERWEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... 7100290cd1

[winston]

REITs ‒ Malaysia
Sector Remains Attractive; Accumulate On Weakness

The sector has outperformed the FBMKLCI ytd (+5% vs -1.9%).

With 1Q22 recording encouraging results, we expect the sector to continue to be resilient and fully recover back to pre-pandemic levels in 2023.

Office REITs offer higher stable yields, followed by retail REITs, which will be boosted by the earnings recovery especially when more international tourists come in.

Maintain OVERWEIGHT. Top picks: Sunway REIT, IGB REIT and Sentral REIT.

Source: UOBKH

https://research.uobkayhian.com/content ... 6e02adffb6