Local investors are slow to invest in Malaysian REITs, unlike some foreign institutional investors who are grabbing selective stocks that they deem are undervalued.

SINCE the listing of the first real estate investment trust (REIT), Axis REIT, in August 2005, Malaysian REITs have grown steadily. An increasing number of REITs of different asset classes are being listed on Bursa Malaysia each year.

Foreign institutional investors who have not seriously considered Malaysia as a preferred investment destination for REITs are now taking a second look at this option.

The sudden attraction may stem from Malaysia's robust economy and a strong interest in properties from local and foreign buyers, with several en bloc sales of residential and commercial properties over the past two years.

Greater foreign interest in Malaysian REITs is buoyed by the strong infrastructure development occurring in major cities across the country, especially in the Klang Valley and the Iskandar Development Region in Johor.

Their interest would be further stoked by the acceleration of the Ninth Malaysia Plan projects across the nation. Foreign institutional investors also view Malaysian REITs as undervalued.

Kurnia Insurans Bhd chief investment officer Pankaj Kumar, who manages funds of about US$460mil, said foreign institutions were generally keener than locals to invest in Malaysian REITs, despite its infancy and the asset size of local REITS.

"Malaysian REITs may be small compared with REITs in mature economies that are worth billions, but foreign investors are still willing to invest. One of the reasons is that they are more familiar and knowledgeable about REITs," he told StarBiz. more...