Thanks a lot Cherroy for the massive amount of info, appreciated the intelligent discussion. So far my experience is mostly in physical properties, net capital gain is about 15% per year and net rental yields is about 5.7%, so far the rental is enough to pay off my monthly installment . REIT's have better yields, but lower gains, yet easier to administer.

Now having some capital, was thinking either to buy another property (expensive and low yield nowadays so keep on deferring.... ) or put into REITs. Both also leveraged with BLR-2.1%, with equity pulled out of existing property (80% paid up ). Also I have to pay 24%-25% income tax on the rental gains , while REIT's I pay only 10%. Decisions, decision....

Penny for your thoughts?

This post has been edited by gark: Jun 11 2010, 04:44 PM

The right mentality of investment is to get a piece of return that is higher than FD or conventional tools like bonds with some risk involved.

Investment is not for "get rich" or "get rich quick".

Claim or not claim, I/we don't care, what we care what is the risk we are taking, what expected return can be.

In reit, we expect some yield for 7-8% which is 2x FD rate can offer, with any capital appreciation side is a bonus, and not something take for granted.
If FD is offering 7-8%, I/we might dump reit as well.

People only talk about good side of story of real physical properties investment, like who become millionaire become invested in properties, who gain 40% yield because buy at right location right timing etc.
But there are still a lot of people that buying some properties under abandoned project (which bank still charge loan interest), shoplots that grow grasses only, little tenants want to rent, buying lots in shopping mall that never fill up more than 30-50% etc.

There are also a lot of people bought properties at 10K, but now worth 150k, after 20-30 years, but if calculated carefully, the real/net return rate is worst than FD. But still people proclaim, it is a successful investment, see invested in properties 10K become 150K, or become millionaire, in fact it is not a successful investment.

This is always little point in comparing which investment is better than the others, it never has any conclusion because there is never "best/better" investment than the others. They just has some pros which one may like and comfortable with it.

This post has been edited by cherroy: Jun 11 2010, 04:40 PM

Good conclusion

wow.. my kinda answer

Yup, nearly forget about the tax issue as well. Net yield for physical properties could be 5%, but after deduct income tax, it become 4% (if 25%) only. Reit only incurred 10% witholding tax.

The catch are always several factor
1. Liquidity, I rate liquidity is one of most important aspect of financial management.
2. Real hard asset ownership feel, reit cannot offer this.
3. Want lazy -> reit. Want hand on -> real properties
4. Diversified, reit is offering better option in this
5. Control, real property better. Reit, you need to trust the property management company solely, how to manage.

Actually it is not right to conclude reit has lower gain and physical properties has higher, because everything is still on going process, as even your existing physical properties has appreciated 30%, ,until you sell it, it never a gain. Who's know today prime properties can be nobody want one 10 years later.
In real situation, it did happen, although not on prime location in KL/PG etc. But this is really happening on some township.

Also physical real properties could gain 30% this year or next year. But can it be no appreciation at all for the rest 5-10 years and normalise the total return? The answer can be yes as well.

It is not normal to see properties price to appreciate more than 15-20% pa in general.

Well said brother cherroy, yes REITS is a long term investment......not a get rich fast scheme.


I only wish that FD is about 10% & then it's goodbye to REITS......but I guess we have to wait a very, very long time before we come to that figure.



Cheers.

If FD is 10%, then reit price will be adjusted to a yield around 15%. Market is always efficience in this kind of adjustment.

10% FD rate may never occur in our or my life time again.
and also, I don't wish it to be happening.

1998 FD rate was 10%+, which I had seen some people dump FD 5 years at a rate of 10.xx% + Free Astro subscription for 1 year inclusive hardware installation.

Your right, The only time that happen is during 97 recession

Btw Cherroy, Is there any significant bad side to REIT except for lack of liquidity of normal stock?

I think got some other countries giving > 10% FD. Maybe Greece or Iceland

If FD ever goes up to 10%, imagine what our BLR will be. The whole economy will grind to a halt. I would not want to face such a scenario...

Xuzen

CapitaMalls Malaysia Trust (CMMT) to be listed in Busa Main Market soon.

http://biz.thestar.com.my/news/story.asp?f...33&sec=business

CapitaMalls Asia is offering MR$1.10 per share to institutions.


A source said that the cornerstone size was purposely made smaller than that in the Sunway REIT IPO to give good liquidity in the after market. At M$1.10 per share, the 2011 dividend yield is estimated at 6.8%. The REIT contains three malls valued at M$2.13bn – Gurney Plaza, Sungei Wang Plaza and The Mines.


2011 dividend yield which is estimated at 6.8%, is it a good buy.....comments please.



Cheers to all.

This post has been edited by monkeyking: Jun 13 2010, 02:46 AM

1.1 share to institution which means retail investor price is more expensive. Sunway IPO is suppose to be at RM 1 with 6.7% projected.

Still think its a good deal? Btw starhill is at 0.8 and projected return is 8%

6.8%?

There are more than 10 more REITs counter listed in KLSE that gives >6.8% yield. I'll pass...

Xuzen

6.8%? ......too low to take note off .......will follow too ...just skip this offer and concentrate on the present REITS that are already listed.

Yup, 6.8% is a bit low.

But the quality of the properties like Gurney plaze is a strong selling point, as the properties is
1. in strategic location, land value for sure appreciated in the future as situated or surrounded by luxury condo, with multi-million properties surround.
2. Strong rental market, fully occupied, and potential rental increment in the future.
3. Mall is well maintained and crowded.

Not to mention also it is along Gurney Drive, a sure-fire place to attract tourists. But you should know more

But if that's such good locations (gurney plaza, sungai wang are superb location and very crowded), why only 6.8%? I thought REIT suppose to give very high portion of their profit out as dividend?

This post has been edited by yok70: Jun 14 2010, 01:42 AM

Maybe they "over declare" their property value to their own REIT's, thus selling the properties at a higher price. When the property is sold at 'above' market value, naturally the yields will have to come down because the rentals cannot catch up with the rich valuation.

Oh boy! It's exactly like "government spending, citizen suffering" situation!