Last week, I updated an article about the top 10 Singapore REITs that would have made you money if you had invested since their IPOs. Out of the 25 S-REITs that have been listed for at least 10 years, 20 have delivered positive overall returns for investors.
In this article, we will measure the performance of REITs listed in Malaysia. Following the onset of the COVID-19 pandemic in 2020, Malaysian REITs—primarily consisting of retail and office REITs—faced significant challenges. However, in 2024, there was a strong recovery in REIT prices across the board. Higher tourism numbers boosted foot traffic and overall spending in shopping malls, enabling landlords to increase rents.
Despite the strong rebound last year, Malaysian REIT prices are still 10% below their pre-pandemic levels. It may seem that REITs have underperformed since then, but as income investors, we must always assess performance on a long-term basis. Share price fluctuations are mostly driven by news in the short term, but in the long term, they are influenced by fundamentals.
In this article, we will evaluate the performance of REITs with a listing history of at least 10 years. In total, there are 16 M-REITs that IPOed in 2015 or earlier, including one new entrant, Al-Salam REIT, which met this criterion this year.
We will assume that Sophia, a fictional character, invests RM1,000 in each of these REITs from the day they were listed. Since Sophia is a dedicated income investor, she chooses not to contribute additional funds to subscribe to any rights issues (if any) and is prepared to accept any resulting share dilution. For simplicity, we will also assume that she does not sell her nil-paid rights, even though doing so could generate a profit.
For example, if Sophia had invested RM1,000 in Sunway REIT at its IPO in 2010, her initial investment would have grown to RM2,080 by 31 December 2024, representing a 108% capital gain. In addition to that, she would have collected a total of RM1,280 in dividends, amounting to a 128% return from distributions.
From the table above, Sophia would have made a solid return from Sunway REIT, as her initial investment of RM1,000 would have grown to RM3,360, including the dividends received over the years. If she had invested RM10,000, her investment would have grown to RM33,600, and an RM100,000 investment would have turned into RM336,000. Essentially, the more money she invests, the more she earns—and the longer she holds, the more dividends she collects. Overall, her annualised return from Sunway REIT alone is 9.03% from 2010 to 2024.
After more than ten years of investing, here are the top five best-performing Malaysian REITs for Sophia, ranked by annualised return.
Note: We’ve excluded brokerage costs, currency exchange gains/losses, and any taxes that might apply to foreign investors.
5. Al-Aqar Healthcare REIT (Annualised return: +5.69%)
Since 2006, a RM10,000 investment in Al-Aqar Healthcare REIT would have grown to RM13,600. Including dividends, the total value of that investment would have increased to RM27,100.
4. IGB REIT (Annualised return: +8.05%)
Since 2012, a RM10,000 investment in IGB REIT would have grown to RM17,600. Including dividends, the total value of that investment would have increased to RM28,400.
3. Pavilion REIT (Annualised return: +8.37%)
Since 2011, a RM10,000 investment in Pavilion REIT would have grown to RM13,800. Including dividends, the total value of that investment would have increased to RM23,500.
2. Sunway REIT (Annualised return: +9.03%)
Since 2010, a RM10,000 investment in Sunway REIT would have grown to RM20,800. Including dividends, the total value of that investment would have increased to RM33,600.
1. Axis REIT (Annualised return: +9.25%)
Since 2005, a RM10,000 investment in Axis REIT would have grown to RM27,700. Including dividends, the total value of that investment would have increased to RM53,700.
In summary, here is Sophia’s overall performance:
As you can see, Sophia’s M-REIT portfolio is a sea of green, with the exception of Al-Salam REIT, which is a new entrant this year. M-REITs have provided consistent dividends and positive overall returns for those who invested from their IPOs. In fact, dividends accounted for about 92.4% of the total return! During bear markets, like the one we experienced over the past four years, dividends serve as a cushion against falling prices, while in bull markets, capital gains boost the overall return.
Singaporeans and foreign investors who are concerned about forex risk may be less inclined to invest in M-REITs, given the long-term weakening of the ringgit. However, Malaysians are unaffected by this, as M-REITs are traded in their home currency. So, if you’re a Malaysian, M-REITs remain a viable option for building consistent streams of passive income.
Just a quick reminder: Enrollment for Dividend Machines 2025 is still open until Sunday, 2 March 2025, at 11:59 PM. If you’re looking to learn how to invest in dividend stocks and REITs to build multiple streams of passive dividend income, we encourage you to check out Dividend Machines before the deadline. Once the deadline passes, Dividend Machines will only reopen in 2026. So, if you miss this round, you’ll have to wait for another year before we accept new members again.
Happy investing and we hope to see you on the inside! 🙂
