The sector is expected to be on a recovery path as consumer activities pick up and more asset acquisitions are to take place in the next two years to drive growth.Maintaining its “overweight” stance on REITs, the brokerage said the sector was poised for a strong comeback as consumer spending and footfall pick up, following the relaxed restrictions on the movement control order as well as the upcoming Hari Raya festive season.
According to a report by Retail Group Malaysia , departmental stores-and-supermarkets are one of the hardest-hit sectors with a decline of 20.2% recorded in sales, while speciality retailers were the least impacted sub-sector, recording the smallest decline in sales of 11.7% in 2020. Quoting property consultancy Knight Frank, it anticipated that the values of the prime grade retail assets to remain relatively stable despite the rental decline, supported by the more resilient tenant and lease profiles, as well as the existing low-interest-rate environment which will cushion the yields of the properties.
“In view of that, we do not rule out the chances of potential acquisitions to happen in the next 12 to 18 months for the REITs under our coverage, taking a cue from their strong financial ability and debt headroom of 23% to 42% debt-to-asset ratio compared to 60% of the regulatory threshold, ” AmInvest said.