How property trust works and why more people should invest in this relatively unpublished area.

Most of us are familiar with the conventional investment mediums such as stocks, property, Initial Public Offering (IPO) and so forth.

However, have you ever heard about trust investment, specifically in property trust investment?

The landscape of property trust investment in Malaysia is somehow and somewhat foreign to individual investors community but is very actively discussed and joined by large business entities.

In more developed countries such as Australia and United States, individual investors are playing a very proactive role in the market, supported with many potential property trust projects booming (this is perhaps due to the vast available area that is under development).

Essentially, jumping into a new form of investment means that you need to understand the fundamentals of how the investment mechanism behind property trust works.

How Property Trust is created

A trust is created when a  settlor that build the property transfer some or all of their property to a trustee. The trustee then will hold and manage the trust for that property, for the benefits of the beneficiaries. The property can be in form of money, investment, land or building.

In short, there are 3 parties involved in a construct of a trust ie: settlor (which transfer the asset and ceasing to be their owner), trustee (the legal owner of the assets, holding them in trust funds and managing them for the benefits of the beneficiary), and the beneficiary (which receive the returns for the investment).   

The trustee can be a single person, or a managing board and even a public corporation. There can be a single trustee or multiple trustees and the same goes for the beneficiary, can be single or multiple beneficiaries.

Sometimes, the beneficiary and the settlor can be the same person/organisation. Similarly, the trustee can also be the settlor. This case is a common occurrence in the investment world

How beneficiaries benefit from their investment

Let’s take an example, where a piece of land was developed into a shop lots and given to a managing company. The managing company then searched for potential tenants, and at the same time raise funds for the capital of the management cost. The fundraising usually attracts investors to invest and hoping for healthy return.

How to choose the right investment to put your fund into? The first good indicator would be the reputation of the managing body. The easiest way would be to find out their track record, the reviews of other investors that worked with them before.

Second would be to evaluate the potential of the property. In the case of developed area, you can measure the performance of the tenants that took up the shop lots to open their branch. You can also take into consideration the geographical advantage the property holds and if there any more development taking place that is taking place.

The third indication would be the traffic of the customers/buyers that flocked into the property. The higher and steadier stream of consumers will result in more assurance of fruitful capital gain and return of investment. This is because the looping customers flow will bring profits to the tenants and hence, securing the return from the tenants

How To Start Investing in Property Trust

To look for investment opportunities, you can look into few both publicly listed and private Real Estate Investment Trust companies. And after that, you can do a thorough background check on that company to assess their performance over the years.

Our local pride, IGB Real Estate Investment Trust, or mainly known as IGB REIT, is managing two prominent shopping malls in Malaysia, namely The Gardens Mall and Mid Valley Megamall. A public listed REIT, IGB is expected to be more robust and gain more resilient earning.

Other widely-known listed REIT companies are the Australian Charter Hall Group (CHC) and Singapore-based Capital Mall Trust.

A fine example of a private Real Estate Investment Trust company is the 838 Marion Road Adelaide Property Trust is brought to you by Red Wealth, located alongside Marion Road, which is one of the major roads that connects Adelaide CBD to the rest of South Australia.

Red Wealth is one of the prominent property and commercial investment company in South Australia.

Red Wealth is now bringing this opportunity to avid investors so there will more options of secure investment with lower risks and promising returns. This opportunity is now exclusively available via the private online funding platform, Morgan Capital.


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