M-REITs still favoured despite expected lower rents

Malaysian REITs (M-REITs) have long been a favourite of risk-averse investors, given the asset class’ stable returns and promise of healthy dividend payments. However, the coronavirus pandemic has raised concerns about the resilience of rental payments, which are vital to the net property income performance of M-REITs. Analysts and fund managers are still sanguine about the performance of M-REITs, but qualify that this would depend on the type of properties making up the portfolios. TA Investment Management chief investment officer Choo Swee Kee says the REITs expected to be negatively impacted by Covid-19 are those in the retail and hospitality sectors, while industrial REITs will be the least affected. “Hence, we favour industrial REITs. [For retail REITs], however, you have to take a longer-term view because when weaker tenants leave, the mall owners will replace them with other tenants that are [able to service] the rental payments,” he said. Pankaj C Kumar, a former director of investment at KSK Group Bhd, says the acid test for REITs will come when rental agreements are up for renewal. Nevertheless, he believes investors can still garner decent returns from REIT investments. “This is because yields for the sector are still attractive, with some REITs offering 7% to 8%, which is more attractive than putting money in fixed deposits, which offer much less.” (The Edge)

Ministry looking into blacklisting PPR rental defaulters

The Housing and Local Government Ministry is looking into blacklisting People’s Housing Project (PPR) tenants, who fail to pay their rents, under the Credit Reporting Agency (CRA) including CTOS. Minister Zuraida Kamaruddin said the move to study the issue was among matters that would be detailed under the Strata Management Act 757 (Act 757) in the next three months. She said the Act would enable a management of a strata house to include ‘quit-rent’ and insurance under maintenance fees as well as to enable tenants who did not pay rent for 12 months to be charged interest. “The Act 757 is already a law but when it is not being enforced, it is not effective,” she said. In October last year, rental arrears involving Public Housing Projects (PPA) and PPR in the country was reported at RM58 million. (Malay Mail)

ECRL alignment reversal still at discussion stage

The government’s plan to reverse the multibillion-ringgit East Coast Rail Link (ECRL) to its original line is only at the discussion stage. Minister in the Prime Minister’s (PM) Department (Economy) Datuk Seri Mustapa Mohamed confirmed a report by a daily last week on the matter, but stressed that no decision has been made. He also dismissed analyst reports that the reversal could cost an additional RM20 billion to the project. Introduced by the BN government in 2017, the RM65.5 billion project was revised and scaled down by the Pakatan Harapan (PH) administration last year with a cost reduction accounting to RM21.5 billion in savings. Most of the savings were attributed to the tunnelling construction into the Titiwangsa Range in Bentong, Pahang, which is estimated to cost between RM8 billion and RM10 billion. (The Malaysian Reserve)

ECRL Public Inspection Launching Ceremony at Kuala Lumpur

Higher education institutions reopening by October

With higher education institutions (HEIs) fully reopening in October, the Malaysian Association of Private Colleges and Universities (Mapcu) has given the assurance that all health and safety precautions will continue to be strictly enforced. Mapcu president Datuk Dr Parmjit Singh said at any given time, 30% of the total student population can be present on campus from now until full reopening, following Higher Education Minister Datuk Dr Noraini Ahmad’s announcement yesterday that HEIs will fully reopen in October. Noraini said all HEIs will be given the flexibility to determine the most suitable modes – including online learning – for their respective programmes. “We are addressing accommodation and flight ticketing issues for the return of the students,” she said. All international students must register with Education Malaysia Global Services and undergo a polymerase chain reaction test before they are allowed to enter the country, as well as undergo 14 days of quarantine at locations determined by their respective HEIs. (The Star Online)

Govt targets RM513mil in Buy Malaysia Campaign

The government is targeting sales of at least RM513mil in this year’s Buy Malaysia Campaign that will take place from July until the end of the year. Domestic Trade and Consumer Affairs Minister Datuk Alexander Nanta Linggi said last year’s campaign from September to December saw sales of RM430mil for both Malaysian products and services. The figures only cover major retailers and online marketplaces and do not include smaller retailers, for example. “To revitalise and re-energise the economy, we have to focus on local enterprises. Their products will be given priority. If we can help our local enterprises, there will be no loss of employment, ” he said. He added it was important to strengthen public-private partnerships to accelerate the digitisation of Malaysian businesses, especially for small and medium enterprises to ensure the domestic economy did not get left behind in the wake of the Covid-19 pandemic. (The Star Online)