Deep, deep dive
Historical Performance of Malaysian REITs vs. Traditional Property and Stocks
In October 2017, Bursa Malaysia launched the Bursa Malaysia REIT Index. This index gives investors a high-level overview of the overall performance of Malaysian REITs. It also allows us to compare the historical performance of M-REITs compared to property and stocks.
Here’s how the M-REIT Index has performed from 24 January 2018 until 24 January 2020.
Over a 2-year period, the overall performance of M-REITs as a whole has largely been flat. Keep in mind that this only measures the price. It does not factor in the regular dividend payments unitholders received.
Here’s how the overall Malaysian stock market—represented by the FBM KLCI Index—did over the same timeframe.
The graphs say it all. Over the past two years, M-REITs have stayed stable while the broader Malaysian stock market declined by about 15%.
What about the Malaysian residential property market? The Malaysian Real Residential Price Index is only measured quarterly, and the latest data is only as of 30 June 2019. It is also not compiled by the Malaysian government, but rather by the Bank of International Settlements. But we can still use it as a basis for comparison.
Over the same period, the index grew about 1.3%. So, it performed slightly better than M-REITs in terms of price appreciation.
But what do all these data say about REITs as an investment? Does its historical performance compared to stocks mean you should immediately dump all your stocks and put it in REITs? Not so fast.