Kuala lumpur: Maybank Investment Bank Bhd (Maybank IB) has expressed confidence in the Malaysia real estate investment trust (REIT) sector’s prospects leading into 2026. This optimism is driven by strong fundamentals, a stable rate environment, and a recovery in tourism demand.

According to BERNAMA News Agency, Maybank IB anticipates earnings growth to stabilize after a robust 2025. However, the visibility of income remains high, supported by healthy occupancies, positive rental reversions, and prudent balance sheet management. The bank forecasts a nine percent year-on-year earnings growth for 2026, with the retail and hospitality sectors leading the way. Pavilion REIT and CapitaLand Malaysia Trust are highlighted as top picks in this sector.

The REIT industry is expected to continue offering defensive yield support of five percent. Challenges persist in office fundamentals at the market level, but income risks are mitigated for REITs that have long-term and triple-net lease structures.

A potential downside risk is the uncertainty surrounding the withholding tax concession. If not extended, this could result in a post-tax yield compression ranging from 50 to 100 basis points. Retail and hospitality sectors are projected to drive key earnings into 2026, bolstered by sustained footfall, asset enhancement initiatives, and the tourism upcycle anticipated from Visit Malaysia 2026.

Industrial assets are expected to provide stable, long-term income and portfolio diversification. However, the office segment continues to face structural challenges due to oversupply. The performance in this segment is increasingly dependent on asset quality, tenant profiles, and lease structures.

Across the sector, active portfolio rejuvenation through asset enhancement initiatives, selective acquisitions, and asset recycling remains a critical strategy for sustaining medium-term dividend per unit growth.