capitals malls SG dy% is so low....

I am stacking up creosus REIT.. 9% DY

Seems like there is much mis-conception of REITs and some say it is safe passive income, some say beats inflation, well one has to understand the relationship of REITs to macro economics to understand it's properties.

1. REITs YIELD behaves like BOND YIELD
Reits is based on consistent payout of income, so it more or less behaves like a bond with a similar consistent payout. If the interest rate goes up, if investors can find other means of getting higher constant dividend yields with less risk, the yield of the REITs will need to match. Hence the relation ship of the BOND/REIT usually moves in tandem but at different percentage.

2. REITs PRICE moves like EQUITY PRICE
REIT price is not immune to macro economics, and generally if the stock market fall overall sentiment will cause the prices to fall and vice-versa. Macro economics can affect REITs loan interest, occupancy, revaluation of property etc. While Bond guarantees the principal payment, there is no such guarantee for REIT, hence the much higher volatility.

3. REITs is a better inflation hedge than BOND
As inflation goes up. property prices goes up, while we investors cannot directly enjoy the higher property prices,the Debt/asset value will come down with higher revaluation of the property. This enable the REIT to gear up and acquire more rental property. Also rental tends to move with inflation as well. Therefore REIT is a better inflation hedge than bonds which have no provision for higher dividends.

4. REIT is much riskier and more volatile than BOND
Refer to point 1 & 2, therefor need command much higher yields. 

5. Not all REITs are the same
When comparing REITs, you notice that different REITs have different yields. This shows the market allocation of 'riskiness' to the REIT. The riskiness of the REIT is compared on the following item..
a. Debt/Asset value - Higher D/A ratio means higher loan and higher risk or loan interest going up. Also lower D/A value enable the REIT to grow by acquiring more leveraged assets
b. Asset type - different asset commands different risk, now retail is 'seen' to be the less risky while office/hotel is deemed to be the most risky due to oversupply hence lower occupancy. Long term industrial lease is also seen to be safe.
c. Asset quality - Obviously a big famous retail mall is deem to have better asset quality than a small neighborhood mall, similar to office tower and hotels.
d. Tenant quality - bigger name tenants are better than small tenants which cannot withstand rental raise..

Do we have a mall bubble 

7 new malls to be built in Klang Valley this year
http://www.thestar.com.my/Business/Busines...n-Klang-Valley/

Malaysian like to shopping mar

Free air con, passing time.

But only the giant shopping malls will survive eventually.

Yes that's what I read too.

Mall temperature will be adjusted to 25 degree. (so-called cost saving temperature)