Islamic Real Estate Investment Trusts (I-REIT) in Malaysia: Analytical relationships with macro-economic variables

Malaysia has come to be noted as a leader in Islamic finance such that its pioneering experiences in the various branches of Islamic finance may provide valuable pointers to others following or planning to follow in Malaysia’s footstep. This article aims to identify the existence of short-run and long-run relationships between Islamic Real Estate Investment Trust (I-REIT) with macroeconomic variables in Malaysia. Data used in this study are monthly data between December 2008 and December 2013 and are analysed using standard Vector Auto Regression (VAR) model. The findings show that there exist long-run relationships between I-REIT with Consumer Price Index, Industrial Production Index, Islamic Interbank Rate, Foreign Exchange Rate, and FTSE Bursa Malaysia Emas Syariah Index. The results obtained from the VECM test shows that I-REIT is not the short term Granger cause to all of the variables. However, the Industrial Production Index, the Consumer Price Index, and Money Supply are the short term Granger causes to I-REIT variables. Thus, in conclusion, I-REIT s performance is influenced by macroeconomic variables in Malaysia.