Asian REITs market strengthened in H2 last year

Asian REITs market strengthened in H2 last year
Mar 17, 2011 - PropertyGuru.com.sg

Asian Real Estate Investment Trust (REIT) markets intensified in the second half of last year, as purchasing activity increased and interest in Initial Public Offerings (IPO) strengthened, according to the 2H 2010 edition of REITs Around Asia released by CB Richard Ellis (CBRE).

A total of US$5.6 billion has been acquired by REITs in the second half of last year, bringing total acquisitions to approximately US$11 billion. Its total market capitalisation surged 46.8 percent year-on-year to US$95 billion for the whole year.

REITs also became a significant real estate capital-raising outlet during the second half of the year, as investment confidence returned after most REITs completed the necessary recapitalisation or refinancing exercises to meet their loan obligations.

About 14 REITs were listed on Asian stock markets last year, bringing the total number of REITs listed in Asia to 123 at end-2010.

For the full year 2010, acquisitions reached US$11 billion, with activity in Singapore and Japan accounting for 57 percent and 33 percent of the total acquisition volume respectively.

The period was also notable for various Asian REITs looking to invest its assets across Asia. Singapore-listed Ascott REIT and Malaysia-listed Al-Aqar KPJ REIT extended to the Pacific and Europe respectively, as they looked to expand their income sources and portfolios.

The Hong Kong REIT market also showed signs of activity, as discussion started on the first RMB-denominated REIT containing prime commercial property assets in Beijing.

Weighted dividend yields also compressed in the second half of 2010, due to strong stock price rally.

“As dividend yield has been compressed to the level close to yields for physical assets, REITs are expected to turn more active in sourcing new investment objects,” said Danny Mohr, Executive Director, International Valuation of Asia for CBRE.