Mar 8 2009, 11:06 PM
QUOTE(cherroy @ Mar 8 2009, 06:06 PM)
My opinion more and less with Jordy.
It is just similar owning a property, the negative cashflow only can result from property maintenance (assessment, quit rent and miscellanous expenses) and property management fee.
Reit is much simpler to understand that construction company account. In fact, the simplicity and 90% distribution which make it easy to understand, and difficult to hide any accounting irregularity.
Property price will be soft in the coming future, no doubt about, but it won't drop too drastically. As compared to 1997, there is distinct difference between 2009 and 1998, for the coming recession, Malaysian and Malaysia company entering this recession with cash rich in general (as seen from FD or bank deposit grow for the last 2 month because of global financial crisis, also most well managed listed company balance sheet), so pressure to sell by existing property holders are not that great compared to 1998. Also interest rate across the globe are super duper low, zero % or 0.25% or 0.5% everywhere, even Malaysia is expecting to have 1.5% OPR before year end, so those fully paid property has no pressure or having little incentive to be sold.
Sell the property now to get cash and park the cash in 1.5% FD is some move that those cash rich people and company won't that interested to do so.
For reit, the most important to look at is the rental income and ability to renew lease or getting tenants which enable to give sustainable good yield annually.
The pressure of properties price going down come from foreclosure properties and newly built property which will drag down the market value of existing properties.
Office space will be oversupply in Klang valley in the next 1 or 2 years after several big project completed. So office space yield might be affected in the next year or 2.
cherroy,It is just similar owning a property, the negative cashflow only can result from property maintenance (assessment, quit rent and miscellanous expenses) and property management fee.
Reit is much simpler to understand that construction company account. In fact, the simplicity and 90% distribution which make it easy to understand, and difficult to hide any accounting irregularity.
Property price will be soft in the coming future, no doubt about, but it won't drop too drastically. As compared to 1997, there is distinct difference between 2009 and 1998, for the coming recession, Malaysian and Malaysia company entering this recession with cash rich in general (as seen from FD or bank deposit grow for the last 2 month because of global financial crisis, also most well managed listed company balance sheet), so pressure to sell by existing property holders are not that great compared to 1998. Also interest rate across the globe are super duper low, zero % or 0.25% or 0.5% everywhere, even Malaysia is expecting to have 1.5% OPR before year end, so those fully paid property has no pressure or having little incentive to be sold.
Sell the property now to get cash and park the cash in 1.5% FD is some move that those cash rich people and company won't that interested to do so.
For reit, the most important to look at is the rental income and ability to renew lease or getting tenants which enable to give sustainable good yield annually.
The pressure of properties price going down come from foreclosure properties and newly built property which will drag down the market value of existing properties.
Office space will be oversupply in Klang valley in the next 1 or 2 years after several big project completed. So office space yield might be affected in the next year or 2.
<<so those fully paid property has no pressure or having little incentive to be sold. >>
Pardon my ignorance. Are Malaysia REIT all based on fully paid properties?? In USA, most of the REITs are run on property with loan aka they are LEVERAGED. So, there is a possibility that tenancy rate drop below what is needed to service the loan.
Dreamer
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