The liquidity of Asian REITs attracts investment from investors globally, and the greater economic and urbanization growth in the region is encouraging investors’ participation in Asia’s property markets as they hunt for yield and in light of Asia’s increasing landscape of institutional-grade assets.
Just the sheer number of REITs in Asia keeps growing. In the past five years, the market capitalization of Asian REITs has more than doubled to top $148.6 billion in fourth quarter 2013, helped in large part from the now 114 total listed REITs in Japan, Singapore, Malaysia, Hong Kong, South Korea and Taiwan tracked by the recent fourth quarter 2014 release of The Asian REIT Report.
Despite ongoing legal hang-ups, draft REIT regulations in India have been completed, and while it hasn’t happened yet, finalization of REIT legislation in China, the world’s second-largest economy, is eventually bound to go through to allow more investment in the country. Additionally, there are efforts to jumpstart a REIT program in the Philippines, which never really took off before, now that more institutional-grade assets have been developed there.
Interestingly, Hong Kong’s well-established REIT market is seeking to further cement its role in an evolving marketplace: The Securities and Futures Commission is currently open to public comment as it considers amending the REIT code in Hong Kong to allow greater flexibility for HK-REITs to invest or participate in development projects as well as invest in financial instruments such as “listed securities, unlisted debt securities, government and other public securities, and local or overseas property funds.”
Add to this the growing interest — and need — by Asia-based investors to add or increase allocations to real estate in their investment portfolios to help meet their long-term liabilities: The result is a future likely filled with a greater number of Asian REITs in the market and investment opportunities offered by those REITs.
The full story can be found in this week’s IREN.
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Jennifer Molloy is editor of The Institutional Real Estate Letter – Asia Pacific.
