Estimated reading time: 9 minutes
What if you could own a slice of popular shopping malls, office buildings, or even hospitals, earning consistent dividends that outshine fixed deposits or money market funds – all without needing a huge upfront investment? In this article, we will introduce you to Real Estate Investment Trusts (REITs), a simple way to invest in properties and generate passive income through Bursa Malaysia. We’ll break down how REITs work, their benefits, risks, how they compare with other investment instruments and most importantly how to get started using the moomoo app.
Source: Moomoo MY
TABLE OF CONTENTS
What Are REITs and Their Benefits?
Source: Bursa Malaysia
Imagine pooling your money with other investors into a giant piggy bank to buy income-generating properties like malls, offices, or warehouses. Then a REIT management company handles everything from buying, renting, to maintaining these properties. In return, at least 90% (usually) of the rental profits are distributed to investors as dividends. And that’s your passive income!
Here’s why REITs stand out:
- High Dividend Yields : Top Malaysian REITs offer 7-8% annual yields, far surpassing fixed deposits and money market funds.
- Tax Benefits : REITs enjoy tax-free status in Malaysia by distributing 90% of their income, ensuring consistent dividends. Individual investors face only a 2% tax on dividends exceeding RM100,000 annually. Anything below that, it’s tax-free!
- Low Entry Barrier : Unlike buying physical property, you can start with a small investment and trade REITs like stocks.
- Hassle-Free : No dealing with tenants or maintenance, just sit back and collect dividends.
On top of all these, buying REITs is as simple as trading stocks on Bursa Malaysia. They are liquid like stocks which mean you can sell anytime, unlike physical properties that may take months to offload.
If you’re ready to start, here is something you wouldn’t want to miss. Moomoo MY not only makes it easy for you to trade global REITs with minimal fees, it is also offering new users attractive sign up rewards like cash coupons and free shares with my exclusive code ZIET11. Sign up now!
Types of REITs in Malaysia
As of the writing of this article, there are a total of 20 listed REITs under Bursa Malaysia and these are all easily accessible via the moomoo app. You can find the full list in your moomoo app by just typing “REITs”. Choose the “MY LIST 22967” and you get a full list of REITs available in Bursa Malaysia and everything you need to know about the particular REIT like dividend yield, payout ratio, dividend frequency, dividend growth rate and even their 5 year average yield.
From the list of REITs, they usually fall into five main categories:
- Retail REITs: Own shopping malls and commercial spaces, generating revenue from retail leases. (Eg. Pavilion REIT, KLCC REIT)
- Office REITs: Focus on corporate office buildings. (Eg. Axis REIT, UOA REIT)
- Industrial & Logistics REITs: Lease warehouses, factories, and logistics hubs, driven by e-commerce demand. (Eg. Atrium REIT)
- Hospitality REITs: Own hotels and resorts, tied to tourism performance. (Eg. Sunway REIT)
- Healthcare REITs: Own hospitals and medical centers. (Eg. Al-‘Aqar Healthcare REIT)
REITs vs. Other Investments
How do REITs compare against stocks, money market funds, US Treasury Bonds, fixed deposits, or savings accounts?
Based on the below comparison table that I’ve compiled for you, REITs strike a balance – stable dividends with moderate capital appreciation, ideal for those seeking passive income with less volatility than stocks. Unlike safer options like fixed deposits, REITs often outpace inflation, making them a compelling choice for investors.
REITs vs. Bank Stocks
Bank stocks on Bursa Malaysia also offer high dividends, but REITs have these advantages:
- Tax Advantage: REITs’ 90% distribution rule ensures tax-free status, making dividends more reliable than bank stocks, which lack this incentive.
- Stability: Bank stocks are more sensitive to economic shifts, like OPR cuts. In Q1 2025, bank stock prices dropped significantly, while REITs maintained steadier returns.
- Dual Returns: REITs provide both dividend income and potential property value appreciation.
For investors prioritizing consistent income, REITs are a clear winner.
Source: Moomoo MY
Malaysia REITs vs. Singapore REITs
If you’re eyeing capital gains alongside dividends, Singapore REITs (S-REITs) are worth considering. They often own prime properties in high-demand areas like Singapore’s CBD or Orchard Road, benefiting from limited land supply and government regulations. This drives strong capital appreciation. Malaysian REITs, however, excel in higher dividend yields.
How to choose?
- MY REITs: Prioritize high and stable dividends.
- SG REITs: Focus on capital growth with moderate dividends.
With the moomoo app, you can trade S-REITs seamlessly. Go to “Market,” select “SG,” and start exploring.
Factors affecting REITs performance
Like all other investments, REITs aren’t risk-free too. Here are key factors affecting their performance:
- Interest Rates: Higher OPR (Bank Negara Malaysia’s interest rate) increases borrowing costs, reducing REIT profits. Recent OPR cuts have lowered expenses, boosting returns.
- Occupancy Rates: Economic downturns, like during COVID-19, can lower demand for commercial spaces, impacting rental income.
- Property Market Cycles: Oversupply or slowdowns reduce rental yields and property values, while strong markets boost returns.
- Share Dilution: Private placements increase outstanding shares, potentially reducing your dividend share. However, these funds can fuel long-term growth if used wisely.
And on top of all these factors, there are other metrics that you can look into like operation efficiency, net margin, and EPS which can all be found in the moomoo app. Its ‘News’ and ‘Community’ features also offer insights into investor sentiment and it can even be a good place to trigger your critical thinking.
Final Thoughts: Are REITs Right for You?
REITs are perfect for those who want passive income with minimal effort. If you value stable dividends and moderate growth over high-risk stock investments, REITs are a great fit. They’re especially appealing for busy investors who want to avoid the hassle of managing properties.
If you prefer a video version of this article, I have made a video covering the exact same thing – do check it out here!
Get Started with Moomoo
Now, ready to explore REITs? The moomoo app simplifies trading with low fees and comprehensive REIT data. Sign up today with the exclusive code ZIET11 to unlock rewards like cash coupons and free shares before the campaign ends. If you’d like to learn more about Moomoo, I’ve also made a Moomoo Review 2025 video, so be sure to check it out on my YouTube channel! Anyway, I hope you found this blog helpful. Happy investing!
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*T&Cs apply. All views expressed in this blog are the independent opinions of Ziet, which are not shared by Moomoo Securities Malaysia Sdn. Bhd. (“Moomoo MY”). No content shall be considered financial advice or recommendation. Moomoo MY links are included in this post, through which referrals are made and I may receive certain commissions. Please contact Moomoo MY for more information.
