Investing in Real Estate Investment Trusts (REITs) is one of the most effective ways to gain exposure to the Malaysia real estate market without the hassle of direct property ownership. REITs provide investors with passive income through rental yields and capital appreciation while offering liquidity and diversification. As the demand for real estate investment in Malaysia grows, several REITs have emerged as top choices due to their strong financial performance and strategic property portfolios.

Why Invest in Malaysia REITs?

Malaysia Real Estate Investment Trusts allow investors to diversify across various property sectors, including retail, commercial, industrial, and hospitality. With consistent dividend payouts and long-term capital growth potential, REITs are an attractive investment for both income-focused and growth-oriented investors.

Malaysia REIT Performance Table 

Source: Malaysian REIT Data | Last updated: 7 March 2025

Which Malaysian REIT is the Best Investment in 2025?

Several REITs have shown strong performance over the years, offering investors steady dividend yields and capital appreciation. Here are four of the best real estate investment in Malaysia options to consider for 2025:

1. Sunway Real Estate Investment Trust

Sunway REIT is one of Malaysia’s largest and most diversified REITs, managing high-profile retail malls, hospitality, office, and industrial properties. Its flagship asset is Sunway Pyramid Mall, one of Malaysia’s most visited shopping malls. Other properties include Sunway Resort Hotel, Sunway Medical Centre, and Sunway Pinnacle Office Tower. It benefits from a strong brand presence and strategic locations, ensuring steady rental income and capital appreciation.

• Historical Performance: Sunway REIT has demonstrated resilience and growth, with an annualized return of 9.03% from 2010 to 2024. If you had invested RM10,000 in 2010, it would have grown to RM33,600 by 2024.
• Dividend Yield: As of early 2025, Sunway REIT Strong growth in 2024 with a 27.2 percent share price increase and 5.21% distribution yield.

Strengths of Sunway Real Estate Investment Trust:

• A diversified portfolio reduces risk by spreading exposure across multiple property sectors.
• Recent acquisitions of Sunway 163 Mall and Sunway Hypermarkets boosted rental income.

Considerations of Sunway Real Estate Investment Trust:

• Higher gearing ratio of 46 percent could pose risks in a rising interest rate environment.
• The distribution yield of 5.21 percent is lower than some competitors but is offset by strong capital growth.

2. Pavilion Real Estate Investment Trust

Pavilion REIT is one of Malaysia’s largest retail-focused REITs, owning prime shopping malls, including Pavilion Kuala Lumpur, Pavilion Bukit Jalil, and Elite Pavilion Mall. It primarily invests in retail properties, attracts strong foot traffic, leading to stable rental yields and a solid investment outlook.

• Historical Performance: Pavilion REIT has generated an annualized return of 8.37% since its listing in 2011. A RM10,000 investment back then would now be worth RM23,500
• Dividend Yield: Pavilion Real Estate Investment Trust strong performance in early 2025 with a 37.2% share price increase and a 6.19% distribution yield.

Strengths of Pavilion Real Estate Investment Trust:

• Premium locations with properties in prime shopping districts attract high-end tenants.
• Consistent rental income due to high occupancy rates in its malls.

Considerations of Pavilion Real Estate Investment Trust:

• Retail REITs are dependent on consumer spending and economic conditions.
• The price-to-book (P/B) ratio of 1.10 indicates a slightly overvalued position compared to other REITs.

3. KIP Real Estate Investment Trust

KIP REIT focuses on community-centric retail properties, primarily operating in suburban areas. Its portfolio includes KIP Malls in Johor, Negeri Sembilan, and Selangor, targeting middle-income consumers. KIP REIT provides investors with exposure to high-demand community shopping malls. Its properties cater to essential consumer needs, making it a resilient investment option in changing economic conditions.

• Historical Performance: KIP REIT is a strong income-generating REIT, attracting investors with its high distribution yields.
• Dividend Yield: The KIP Real Estate Investment Trust offers an impressive distribution yield of 7.67%, making it attractive for income-focused investors.

Strengths of KIP Real Estate Investment Trust:

• Stable rental income from suburban retail properties that cater to essential shopping needs.
• Lower gearing ratio of 37.3%, indicating moderate debt levels compared to some competitors.

Considerations of KIP Real Estate Investment Trust:

• Limited growth potential compared to premium retail REITs like Pavilion REIT.
• Dependence on suburban markets, which may face lower rental growth than prime city locations.

4. Hektar Real Estate Investment Trust

Hektar REIT invests primarily insuburban shopping malls, focusing on second-tier cities. Its portfolio includes Mahkota Parade, Subang Parade, and Wetex Parade targeting middle-income consumers. Its focus on stable rental income and long-term growth makes it a compelling choice for investors seeking steady dividends.

• Historical Performance: Hektar REIT is known for its suburban retail mall investments.
• Dividend Yield: The Hektar REIT provides higher-than-average distribution yield of 6.30%, making it appealing for dividend investors.

Strengths of Hektar Real Estate Investment Trust:

• Relatively lower price-to-book ratio of 0.48, suggesting an undervalued position compared to competitors.
• Stable rental income from community-based malls with loyal customer bases.

Considerations of Hektar Real Estate Investment Trust:

• Slower growth potential compared to larger REITs with prime assets.
• Moderate gearing ratio of 41.7%, which is manageable but higher than some competitors.

Market Outlook for 2025

The Malaysia real estate sector has continued to demonstrate resilience despite economic uncertainties, reinforcing its appeal for investors seeking real estate investment in Malaysia. In 2024, the KL REIT Index recorded an 11.4% gain, slightly below the KLCI’s 12.9% increase . This performance highlights the steady growth of the Malaysia Real Estate Investment Trust (REIT) market, which continues to provide investors with stable returns.

Notably, Pavilion Real Estate Investment Trust and Sunway Real Estate Investment Trust were among the top performers, with share price appreciations of 37.2% and 27.2%, respectively. 

(This data aligns with MIDF Research findings)

Conclusion of the Best REIT Investment for 2025

For investors looking for a well-balanced and diversified REIT with steady returns, Sunway Real Estate Investment Trust is an excellent choice due to its broad asset mix and historical performance. Meanwhile, those focused on retail properties may find Pavilion Real Estate Investment Trust more appealing due to its prime location assets and strong shopper traffic.

For income-focused investors, KIP Real Estate Investment Trust offers the highest yield at 7.67%, making it a strong option for passive income. Hektar Real Estate Investment Trust also remains a solid choice for those who prefer suburban retail properties.

Ultimately, the best real estate investment Malaysia option in 2025 depends on an investor’s financial goals, risk tolerance, and investment horizon.

Disclaimer: Always conduct thorough research or consult with a financial advisor before making investment decisions.

If you are looking to invest in property rental or looking to buy property, you can explore Property Genie.

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