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REITs: How to Own Mid Valley or Pavilion with Just RM100

REITs: How to Own Mid Valley or Pavilion with Just RM100

Ong Kah Wah

A guide on how Real Estate Investment Trusts (REITs) can give you property

Investing

Key Takeaways

1

REITs allow ownership of income-producing real estate with minimal capital (e.g., RM100).

2

They are legally required to distribute at least 90% of taxable income, providing reliable passive income.

3

REITs offer better liquidity, zero maintenance, and diversification compared to physical property.

REITs: How to Own Mid Valley or Pavilion with Just RM100

For most Malaysians in their 20s, the idea of "property investment" feels like a distant dream. With the average condo in the Klang Valley costing around RM500,000, you would need at least RM70,000 upfront for a downpayment and legal fees as noted by InvestSmart SC. Real Estate Investment Trusts (REITs) offer a way to bypass this hurdle. They allow you to own a "slice" of Malaysia’s most iconic shopping malls, hospitals, and offices without ever needing to deal with a tenant or a mortgage.

What Exactly is a REIT?

A REIT is a company that owns, operates, or finances income-producing real estate. Think of it as a mutual fund for property. When you buy units of a REIT on Bursa Malaysia, your money is pooled with other investors to own massive assets like Mid Valley Megamall (IGB REIT) or Sunway Pyramid (Sunway REIT).

The primary job of a REIT is to collect rent from its tenants and distribute that profit to you. In Malaysia, REITs are legally required to distribute at least 90% of their taxable income to shareholders every year to maintain their tax-exempt status according to StashAway’s guide. This makes them one of the most reliable sources of passive income in the local market.

Why It Beats Buying a Physical Condo

For a young professional, the convenience of a REIT often outweighs the "prestige" of owning a physical unit:

  • Liquidity: You can sell your REIT units in seconds through a banking app and get your cash in two days. Selling a physical house can take six months to two years as explained by CompareHero.
  • Zero Maintenance: You never have to fix a leaking roof or chase a tenant for unpaid rent. Professional management teams handle the dirty work for you.
  • Diversification: Buying one condo puts all your eggs in one basket. One bad neighbor can ruin your investment. A REIT like AXREIT owns dozens of industrial warehouses and offices, spreading your risk.

The 2025 Context: Taxes and Yields

As of 2025, Malaysian REITs (M-REITs) offer dividend yields typically around 5.6%. This is significantly higher than the average residential rental yield of 3% to 4%. However, there are two new updates to keep in mind:

  1. SST Expansion: Starting July 1, 2025, the expansion of the Sales and Service Tax (SST) to include commercial leases may increase costs for some tenants, which could slightly affect the profit of certain REITs.
  2. Dividend Tax: Under Budget 2025, a 2% tax applies if your total annual dividend income exceeds RM100,000. For most retail investors, this tax will have zero impact, but it is a sign of a shifting fiscal landscape.

Is It Good For You?

REITs are perfect if you want real estate exposure but hate the idea of debt or management stress. If you are looking for a steady "rent check" every quarter to supplement your salary, they are an excellent choice. However, remember that because they are traded like stocks, their price can fluctuate daily. You are trading the absolute control of a physical house for the extreme convenience and higher yields of a digital portfolio.

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