A review of efficiency measures for REITS and their specific application for Malaysian Islamic REITS
Journal of Islamic Accounting and Business Research
ISSN: 1759-0817
Article publication date: 13 February 2017
Abstract
Purpose
This paper aims to present a conceptual model on the efficiency of Islamic real estate investment trusts (I-REITs) available in Malaysia. The key difference between the Islamic and their conventional investment vehicle part is mainly its own Shariah framework. For instance, I-REITS must comply with the requirement of Securities Commission Act 1993 as well as the Guidelines on Islamic Real Estate Investment Trusts (Islamic REITs Guidelines).
Design/methodology/approach
The paper reviews and synthesises the relevant literature on the performance analysis and efficiency measurements of REITs. The paper then develops and proposes a conceptual model to measure the efficiency of Malaysian and Islamic REITs.
Findings
The paper identifies and examines the appropriate methods and instruments to measure the efficiency in relation to the risk and profitability of I-REITs. The efficiency measure is important for the fund managers to maximise the shareholders’ return in an investment of property portfolio as well as proposing the best way to allocate resources efficiently.
Research limitations/implications
This is a preliminary review of current work that identifies the issues that will be addressed in future empirical research. The authors will be undertaking this future empirical research in measuring the efficiency of Malaysian real estate investment trusts (M-REITs), particularly the I-REITs, using the non-parametric approach of data envelopment analysis.
Originality/value
To date, there has been very limited research on the efficiency measurement of I-REITs. The current analysis of REIT has been focused on traditional non-Islamic funds. This paper will review and discuss the current literature on efficiency measurement to determine the most appropriate approaches and methodologies for future application in performance analysis of efficiency measure for Malaysian and Islamic REITs.
Keywords
Acknowledgements
The authors would like to acknowledge the Malaysian Ministry of Higher Education, Universiti Teknologi MARA, Malaysia, for the scholarship and anonymous referees for the feedback received in improving the research papers. The authors are solely responsible for any error or omission in this paper.
Citation
Chuweni, N.N. and Eves, C. (2017), "A review of efficiency measures for REITS and their specific application for Malaysian Islamic REITS", Journal of Islamic Accounting and Business Research, Vol. 8 No. 1, pp. 41-53. https://doi.org/10.1108/JIABR-03-2015-0007
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited