"Islamic REITs will allow foreign investors, in particular Middle East investors, to invest in Malaysia's property market without the hassle and responsibilities associated with the direct ownership of company," he says, adding that there is a large pool of capital for investment in the Middle East totaling some $1 trillion.

The Al-'Aqar KPJ REIT, launched by KPJ Healthcare Bhd, will have an initial size of 205 million units and will focus on hospitals. The REIT will buy the buildings from the Johor Corp group for RM300.2 million. KPJ is the healthcare arm of JCorp, a diversified group owned by the state government. KPJ, in a statement to the stock exchange yesterday, said the SC had approved the REIT with an initial fund size of 205 million units.

"Notwithstanding this, and due to high demand for KPJ REIT from Islamic funds, KPJ plans to increase the size of the REIT and will submit relevant application to the SC on this matter soon," the statement said. Earlier this month Dr. Ting Kien Hwa told a property conference that the introduction of an Islamic REIT in the country would give Malaysia the chance to expand its market capitalization and the sizes of its REITs. He added that Malaysia's REIT market was capitalized at US$543 million.