THE Movement Control Order (MCO) imposed to contain the spread of the Covid-19 outbreak is likely to present the real estate investment trust (REIT) sector with buying opportunities, says an industry player.
Stephan Tew, non-executive director at Axis REIT Managers Bhd, said he believes the MCO does not hurt REITs as much as other property sectors.
“There are a couple of REITs that are trading at 50% of their net tangible assets. So, there are a lot of buying opportunities, but the owners sure have their plan for the company.
“Therefore, you find that no one has really gone ahead and done a merger. So, I don’t see that (merger) happening at the moment,” Tew said during a webinar organised by the Malaysian Institute of Estate Agents (MIEA) on the multi-sector market outlook.
Citing Axis REIT, he said despite the MCO, the company is busy, having received a lot of deals from agents, and is allocating RM400 mil this year to seek out new assets.
Last year, the industrial REIT posted a strong growth amid demand mainly from international players from the e-commerce market, and is set to continue growing going forward.
“If you look back at 2018-2019, e-commerce was on the rise and a lot of new players came into the market.
“These players did not exist in 2016 and 2017, and many of them are from Singapore searching for industrial space,” Tew said, noting that with demand exceeding supply, these players are mopping up space in the Klang Valley, Penang and Johor.
In addition, he said, there is strong demand for central kitchens amid growing food delivery platforms.
However, he said for the hotel REIT industry, three-star and below hotels are set to benefit from an improving domestic tourism sector post-Covid-19 following the personal income tax relief of up to RM1,000 on spending related to domestic tourism announced by the government under Budget 2020.
However, four-star and five star-hotels will be affected by low occupancy rates, he noted.
Tew said following Covid-19’s adverse impact, many tenants are asking for rental discounts and deferment.
Eric Lim, founder and group managing director of Hartamas Real Estate Group, said landlords are giving between 20 and 50% rental discounts to tenants.
Although some landlords are also deferring rent payment for one to three months for affected tenants, those unaffected should not be given the same treatment, he said. — April 23, 2020, Bernama
