Real Estate Investment Trusts (REITs) may have a “signalling effect” on retail rents in the vicinity of properties they own, Minister of State for Trade and Industry Teo Ser Luck said in parliament on Monday (July 7).
He was responding to a question by Workers’ Party Non-constituency Member of Parliament Yee Jenn Jong on whether the Government agreed with a recent report that showed REIT-ownership was not the determining factor for rents.
“REITs have some signalling effect on landlords around the area when the rental increases or decreases … But REITs may not be the dominant factor in influencing the market,” Mr Teo said.
The Ministry of Trade and Industry in May published a study that concluded REIT-owned shopping malls commanded higher rents compared to their single-owner peers due to better locations and enhancement works, instead of ownership.
This is in contrast to the growing perception that rents at malls owned by REITs are rising at a faster pace and threatening the survival of many local small and medium enterprises.
Mr Yee had also noted during this year’s Budget debate that REITs’ huge collective hold on the market allow them to force prices upwards.
Mr Teo noted that more detailed rental data on retail and industrial space, broken down by streets and planning regions, have been made publicly available since April. The government is also looking at publishing additional information on retail rents by the end of the year.
“This will add to the existing information available on the rental market and help businesses make more informed decisions during lease negotiations,” Mr Teo said.
Source : Channel NewsAsia – 8 Jul 2014