A review of efficiency measures for REITS and their specific application for Malaysian Islamic REITS

Chuweni, Nor Nazihah; Eves, Chris

doi:10.1108/jiabr-03-2015-0007

Cited by 11 publications

(9 citation statements)

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“…Studies found that macroeconomic policy and variables have fundamental and long-run relationship with performance of REITs markets, with usually any shocks will tend to lower the REITs returns compared to investors' expectation. There is also a study by (Nazlioglu, Gormus, & Soytaş, 2016) (Chuweni & Ahmad, 2014;Chuweni & Eves, 2017;Mohamad & Saad, 2012;A. Osmadi & Razali, 2014;Teh, Soh, & Yan, 2012;Yahya et al, 2016;Zainuddin & Nordin, 2016), which is not surprising since the first I-REITs in the world, the Al 'Aqar KPJ REIT is based in Malaysia (Najeeb & Vejzagic, 2013).…”

Section: Reits Performance Risk and Volatilitymentioning

confidence: 96%

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Literature Review on REITs and Islamic REITs and Lessons Learned for Islamic REITs in Indonesia

Indrawan

Wahyuningsih

2019

ijief

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Real Estate Investment Trusts (REITs) as a new instrument in many capital markets is an interesting topic.Although not yet to be popular globally, REITs has gained popularity as flexible, cost efficient and profitable real estate investment vehicle for investors as well as provide liquidity for real estate sector, especially in advanced markets like in US, Japan and Singapore. The emergence of Islamic Financial Institutions (IFIs) coincided with increasing popularity of REITs open opportunity for development of Islamic REITs (I-REITs) as competitive but sharia compliant REITs compared to the conventional one. The dominance of Malaysia as market player of I-REITs as well as many underresearched areas open opportunity for betterment of the current I-REITs markets. This paper is a literature review with two objectives. First, to compile and review existing articles on REITs, both conventional and Islamic, and second, to gain lesson learned as material for development of I-REITs in Indonesia as ultimate goal. It is expected that this literature review will generate ideas for future development proposals on I-REITs, particularly in Indonesia. This study found that literature on I-REITs is relatively thin compared to its conventional counterparts, and Indonesia is still left behind in I-REITs development despite regulatory framework is already in force. Therefore, further effort to promote supply and demand of I-REITs in Indonesia should be taken as a way to diversify Islamic investment avenues for sharia oriented investors.

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Section: Reits Performance Risk and Volatilitymentioning

confidence: 96%

“…Other studies have tried to find empirical evidence of I-REITs performance, most of them are cases of Malaysia (Akinsomi et al, 2016;Chuweni & Eves, 2017;Ma'in et al, 2016;Mohamad & Saad, 2012;A. Osmadi & Razali, 2014;Teh et al, 2012;Yahya et al, 2016).…”

Section: Reits Performance Risk and Volatilitymentioning

confidence: 99%

Literature Review on REITs and Islamic REITs and Lessons Learned for Islamic REITs in Indonesia

Indrawan

Wahyuningsih

2019

ijief

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“…The performance of M-REITs are also measured using the non-parametric approach of data envelopment analysis in terms of efficiency and productivity performance (Chuweni and Eves, 2017, 2019; Chuweni et al , 2017; Chuweni et al , 2019; Chuweni et al , 2018). Islamic REITs exhibited higher efficiency and productivity performance as compared to their counterparts (Chuweni and Eves, 2019; Chuweni et al , 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

“…According to Chuweni (2018), the purpose of conventional performance measurement methods is to evaluate the return of investment by measuring risk of the REITs towards its returns with its insinuated benchmark. Chuweni and Eves (2017) provide a review of efficiency measures for REITs and their specification application for Malaysian Islamic REITs. In their study, the measures used among others are Markowitz’s (1952, 1959, 1991) mean variance portfolio theory, Sharpe’s (1966) ratio, Treynor’s (1965) ratio and Jensen’s (1968) alpha ratio with limited studies on the efficiency ratio of M-REITs particularly examining according to the type and property sectors.…”

Section: Introductionmentioning

confidence: 99%

The significance and performance analysis of Malaysian real estate investment trusts

Khairulanuwar

Chuweni

2020

IJLMA

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Purpose This paper aims to examine the significance and performance analysis of the Malaysian Real Estate Investment Trust (M-REIT) from 2014 to 2018. Design/methodology/approach Performance analysis is done through operating ratio (current ratio), leverage ratio (debt ratio) and efficiency ratio (return on asset and return on equity). Findings M-REIT has been ranked 27th globally and 7th in Asia Pacific REIT market, implying the significance of the market. The trend of market capitalisation of M-REIT had flourished from 2014 to 2017 but declined in 2018. The total assets of M-REIT have been seen thriving over the years with both Islamic REIT market capitalisation and total assets showing improvements throughout the year. From the viewpoint of efficiency ratios of ROA and ROE, Islamic REIT is deemed more favourable to investors than conventional REITs, implying the high receptive of Islamic REITs. Research limitations/implications In terms of efficiency of operation, it is evident that several sectors of REITs may be at risk of liquidity due to the decline in current ratio from 2014 to 2018, as current ratio of less than 1 is considered a red flag. Originality/value Performance analysis on the performance of each sector as the outcome of the research could ease investors’ decision-making as whether it can be considered as one of the viable investments available in the market.

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“…Therefore, the efficient frontier analysis can capture the actual performance of an entity that is beyond the financial ratio analysis (Alsharif, 2020a). The financial ratio analysis also does not reflect the efficiency in utilizing the REITs' resources, and the efficient frontier analysis promotes competitiveness in the REITs industry as each REIT wants to lie on the efficient frontier (Chuweni and Eves, 2017). This paper contributes to the literature in various ways.…”

Section: Introductionmentioning

confidence: 99%

The efficiency of REITs industry in Saudi Arabia: profit-oriented approach

Alsharif

2021

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PurposeThis study aims to extensively investigate the efficiency of real estate investment trusts (REITs) in Saudi Arabia.Design/methodology/approachThe study employs the data envelopment analysis on 17 Saudi REITs with an innovative profit-oriented approach in selecting REITs' inputs and outputs.FindingsIt is found that the traditional approach underestimates the efficiency of Saudi REITs in comparison with the profit-oriented approach, implying that relying on the traditional approach in assessing the efficiency of REITs will underestimate their efficiency and provide misleading results about their actual performance. However, both approaches showed that Saudi REITs are very efficient in utilizing their inputs, and the major source of their inefficiency is related to their scale inefficiency. Moreover, small Saudi REITs are more efficient than large ones. Finally, a higher level of debt is supposedly associated with lower levels of efficiency, indicating that Saudi REITs should not rely on debt funding because there is no tax advantage from using debt.Originality/valueThis paper has several contributions to the literature. First, it employs an innovative profit-oriented approach in selecting REITs' inputs and outputs. Second, this study focuses on analyzing the efficiency of REITs in Saudi Arabia, which is the largest country in the Middle East region, regarding size, stock market capitalization and gross domestic product. Finally, to the best of the author's knowledge, this is the first study to investigate the efficiency of REITs in Saudi Arabia, and it provides substantial information for REITs' investors and managers about the current efficiency of the Saudi REITs industry.

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A review of efficiency measures for REITS and their specific application for Malaysian Islamic REITS

Cited by 11 publications

References 50 publications

Literature Review on REITs and Islamic REITs and Lessons Learned for Islamic REITs in Indonesia

Literature Review on REITs and Islamic REITs and Lessons Learned for Islamic REITs in Indonesia

The significance and performance analysis of Malaysian real estate investment trusts

The efficiency of REITs industry in Saudi Arabia: profit-oriented approach

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