Saturday, September 21, 2013

Falling yield not a worrying trend

Falling yield not a worrying trend

BY LIZ LEE

RETAIL properties in the Klang Valley may be recording a falling yield but the numbers were not worrying, according to industry observers. However, the downtrend seems likely to stay.

C H Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen notes that Malaysian real estate investment trusts (REITs) have reported a yield drop from an average of 6.8% in 2011 to 6.2% last year but “we do not consider the yields as low”.


He says in an e-mail reply that based on retail performance statistics reported by retail Malaysian REITs in 2012, yields averaged 6.2% and ranged from 6% to 7.5%.

In comparison, the average retail yield reported was 6.8% in 2011, reflecting a 0.6% drop.

“For retail yields, there will appear to be a declining trend as long as property owners continuously revalue their properties at the current rate.”

He explains that by and large, the slower increase in retail rent has not correspond with the rapid increment in capital value of retail properties. This results in yield compression and would likely be the trend going forward, Foo observed.





“However, retail rents have increased from 5% to 10% in the past couple of years and consequently the lower reported yields reflect the substantial revaluations (of the properties) reported by Malaysian REITs,” he says.

At the moment, the average rent for Tier-1 or super regional malls range from RM11 to RM21 per sq ft per month. Other malls range from RM6.50 to RM7.50 per sq ft per month for Tier-2.

Foo notes that yields are generally similar as revaluations are tied to rental income, perceived risks and future prospects of the retail mall.

Henry Butcher Retail managing director Tan Hai Hsin says the falling retail yield “only reflects the market condition and current competition”.

He says established and popular shopping centres should be able to generate a yield of 7% to 9% while shopping centres located in secondary locations in Malaysia should have a yield of 5% to 7%.

“However, some established shopping centres in small towns of Malaysia are able to generate a good yield of more than 7% due to lack of competition.”

Shopping centres with relatively low occupancy rates will have a yield below 5%, Tan tells StarBizWeek at the launch of mobile app ChopInk by Werebits Sdn Bhd recently.

Is there an oversupply of retail space in the Klang Valley, thus creating too much competition?

Tan says Klang Valley has always been perceived to be oversupplied with malls but developers continue to build more throughout the area.

He draws attention to the disparity between success stories and failures instead.

“Popular shopping centres throughout the country continue to attract shoppers and quality tenants despite intense retail competition and weak economy.

“At the same time, shopping centres that have been suffering from low shopping traffic will continue to face challenges in attracting crowds.”

To the issue of an over-crowded retail property segment, Foo says the retail property sector in the Klang Valley is currently considered in line with market demand.

“Retail malls generally cater to a specific catchment market while super regional malls target tourist arrivals. As long as retail malls are region-specific or continue tapping the growing tourist market, over-crowding of the retail property segment will not arise.”

In the retail space, that there should be 12 developments coming on stream in the next four years, including two refurbishments and one redevelopment, Foo says.

“This translates to an average three malls of about 500,000 sq ft contributing to the total supply each year, (which) we do not foresee would be an oversupply situation.”

On whether retail yield is better than office yields in the current market, Foo says the two property types should not be direct comparisons as they generally have different risks and cost profiles.

However, he says, some office buildings have reported yields higher than retail centres. “Coupled with their greater tenant stability, many would view office yields as preferable to retail yields which are more tenant volatile and demand greater management and marketing expertise.”


Source/Extract/Excerpts/来源/转贴/摘录: http://www.thestar.com.my/
Publish date: 21/09/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock