A review of efficiency measures for REITs and their specific application for Malaysian Islamic REITs

Purpose This paper aims to present a conceptual model on the efficiency of Islamic Real Estate Trusts (I-REITs) available in Malaysia. The key difference between the Islamic and their conventional investment vehicle part is mainly its own Shariah framework. Design/methodology/approach The paper reviews and synthesises the relevant literature on the performance analysis and efficiency measurements of Real Estate Investment Trusts. The paper then develops and proposes a conceptual model to measure the efficiency of Malaysian 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 Islamic REITs. The efficiency measure is important for the fund managers in order to maximise the shareholders’ return in an investment of property portfolio as well as proposing the best way to allocate resources efficiently. Research limitation/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 REITs particularly the Islamic 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 Islamic 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 Islamic REITs.