Maybank IB positive on REITs, expects 9% earnings growth in 2026

• Maybank IB said while earnings growth is expected to normalise after a strong 2025, income visibility remains high on healthy occupancies, positive rental reversions and prudent balance sheet management.

KUALA LUMPUR (Jan 9): Maybank Investment Bank Bhd (Maybank IB) has maintained a positive stance on the Malaysian real estate investment trust (REIT) sector into 2026, supported by resilient fundamentals, a stable rate environment and tourism-led demand recovery.

Maybank IB said while earnings growth is expected to normalise after a strong 2025, income visibility remains high on healthy occupancies, positive rental reversions and prudent balance sheet management.

“We forecast 2026 earnings growth of 9% year-on-year, led by retail and hospitality, with Pavilion REIT (KL:PAVREIT) and CapitaLand Malaysia Trust (KL:CLMT) as top picks,” it said in a research note on Friday.

As for industry REITs, it would continue to provide defensive yield support of 5%.

“Office fundamentals remain challenging at the market level, although income risk is mitigated for REITs with long-term and triple-net lease structures,” it said.

The key downside risk is uncertainty over the withholding tax concession, with potential post-tax yield compression of between 50 and 100 basis points if not extended.

Retail and hospitality are the key earnings drivers into 2026, supported by sustained footfall, asset enhancement initiatives (AEIs) and the tourism upcycle under Visit Malaysia 2026.

Industrial assets continue to provide stable, long-tenure income and portfolio diversification, while the office segment remains structurally challenged by oversupply, with performance increasingly driven by asset quality, tenant profile and lease structure.

Across the sector, active portfolio rejuvenation via AEIs, selective acquisitions and asset recycling remains a key lever for sustaining medium-term dividend per unit growth, Maybank IB said.

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