Overseas retail Reits - risk or reward?

RETAIL real estate investment trusts (Reits) are popular because they are regarded as defensive investments - after all, people will still shop, especially at suburban malls, no matter how badly the economy is doing. Moreover, their current yield of about 6 per cent per year is far higher than bank deposit rates.

On top of safety or defensiveness, overseas retail Reits present an additional interesting proposition - on the one hand, they are still "safe" in the sense that they include well-located malls that will mint money no matter the economic circumstances, but they also give investors exposure to growing spending power in two countries with the largest number of potential middle class consumers in the world, China and Indonesia.

However, there are potential downsides. Because earnings are in a foreign currency, and because the malls are located in a less certain political environment, the risks of investing in them might clash with investors' original intent to invest in "safe" assets.