SHARIAH-COMPLIANT REITS: A COMPARATIVE ANALYSIS OF UNITED ARAB EMIRATES AND MALAYSIA

Abstract

The main motivation of this research aims to examine 1) the performance and risk analysis of Shariah-compliant REITs in UAE and Malaysia and 2) the impact of COVID-19 on the performance and risk of Shariah-compliant REITs. The first part of the analysis is done through accessing the return and risk of Shariah-compliant REITs in UAE and Malaysia from April 2014 – June 2021. While the second part of the paper utilises Sharpe, Treynor and Jensen Alpha index to better access the risk volatility of Shariah-compliant REITs in the 2 regions in the face of COVID-19 pandemic during January 2018 – June 2021. The result shows that there is statistically insignificant return for Shariah-complaint M-REITs and Shariah-compliant UAE REITs though the Shariah-compliant M-REITs outperforms the Shariah-compliant UAE REITs. When compared with their respective country’s benchmark indices, it is observed that the Shariah-complaint M-REITs outperforms the overall market though the result of Shariah-complaint UAE REITs is observed otherwise for the sample period from April 2014 – June 2021 For the second part of the paper, the Shariah-compliant REITs performance is relatively consistent during the COVID-19 pandemic period, this result is especially so for the Shariah-compliant M-REITS as shown through the analysis of the Sharpe, Treynor and Jensen Alpha index. This amplifies the risk resilience characteristics of Shariah-complaint REITs amidst the pandemic risk and provides investors with the confidence that it has the ability to hedge against risk since it displays high degree of robustness.