Malaysian REITs poised for steady leasing demand despite modest earnings pressure

RHB Research forecasts that Malaysia's real estate investment trusts will keep benefiting from solid leasing demand, with occupancy rates remaining stable or improving and rental reversions turning positive. Retail REITs are expected to see their net property income margins revert to more typical levels after the strong performance recorded in the first half of 2026, partly due to a shift in the fuel adjustment mechanism that offsets some electricity cost savings.

Industrial REITs are projected to feel less impact because of lower utility exposure. The firm anticipates the overnight policy rate staying at 2.75% through the first half of 2027, noting that a 25-basis-point increase could reduce FY27 earnings by up to two percent. All eight REITs covered posted year-on-year revenue and earnings growth of 14.5% and 15.6% respectively, though quarterly figures fell due to seasonal retail weakness. RHB maintains an Overweight rating on the sector, with Axis REIT and Pavilion REIT named as preferred selections.