Operating efficiency and return to scale of Malaysian REITS: The preliminary findings

Chuweni, Nor Nazihah & Eves, Chris (2015) Operating efficiency and return to scale of Malaysian REITS: The preliminary findings. Jurnal Teknologi. (In Press)

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Abstract

This paper aims to present preliminary findings on measuring the technical efficiencies using Data Envelopment Analysis (DEA) in Malaysian Real Estate Investment Trusts (REITs) to determine the best practice for operations which include the asset allocation and scale size to improve the performance of Malaysian REITs. Variables identified as input and output will be assessed in this cross section analysis using the operational approach and Variable Return to Scale DEA (VRS-DEA) by focusing on Malaysian REITs for the year 2013. Islamic REITs have higher efficiency score as compared to the conventional REITs for both models. Diversified REITs are more efficient as compared to the specialised REIT using both models. For Model 1, the negative inefficient value is identified in the managerial inefficiency as compared to the scale inefficiency. This shows that inputs are not fully minimised to produce more outputs. However, when other expenses are considered as different input variables, the efficiency score becomes higher from 60.3% to 81.2%. In model 2, scale inefficiency produce greater inefficiency as compared to the managerial efficiency. The result suggests that Malaysian REITs have been operating at the wrong scale of operations as majority of the Malaysian REITs are operating at decreasing return to scale.

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ID Code: 88049
Item Type: Journal Article
Refereed: Yes
Additional URLs:
Keywords: Data Envelopment Analysis, Malaysia, REITs, Return to scale, Technical Efficiency
ISSN: 0127-9696
Divisions: Current > Schools > School of Civil Engineering & Built Environment
Current > QUT Faculties and Divisions > Science & Engineering Faculty
Copyright Owner: Copyright 2015 Penerbit UTM Press
Deposited On: 11 Oct 2015 23:22
Last Modified: 22 Sep 2016 04:37

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