Singapore REITs still dominant in Asia despite current market conditions

Singapore’s real estate investment trust (REIT) market is holding up, despite the current weak market conditions, according to the Asian Public Real Estate Association.

It said that Singapore REITs are attractive to investors because of their well-diversified and cross-border assets as well as the good regulatory framework here.

Singapore is a key player in Asia’s REIT space. Together with Japan and Hong Kong, it accounts for over 90 percent of the REIT market in the region.

Singapore ranks Number 2 next to Japan, and has a market capitalisation of US$21.6 billion as at January 2008.

According to the Asian Public Real Estate Association, there are good reasons why Singapore REITs are attractive.

Peter Mitchell, CEO, Asian Public Real Estate Association, said: “The fact that there is no restriction on investing on offshore assets; that the withholding tax for corporate non-resident investors is 10 percent, which is very competitive; that the REIT is not taxed at the REIT level so the income flows down on a gross basis to investors… so it’s a very attractive proposition.”

The Association also noted that as a group, Singapore REITs are well-diversified, with interests in the retail, industrial and the office sectors, as well as hospitality and healthcare.

And apart from Hong Kong REITs which invest in China, Singapore REITs are the only Asian property trusts with assets offshore. They have interests in more than 10 countries.

Mr Mitchell said: “Singapore has done a great job in establishing itself as a cross-border REIT centre in Asia. I think (it’s a) combination of favourable tax legislation, good regulation and the way in which these regulations are managed by the authorities.”

Amid the current market volatility, the Association said there are opportunities for REITs with excess capital.

Mr Mitchell said: “What that means is that some players may not have excess capital as a result. Others that are well cashed up or modestly geared will have capital supply lines and will be able to compete on a cost of capital basis. And because those fundamentals are good, they stand to see some wonderful opportunities in front of them in 2008.

“Because the real estate fundamentals generally in the region are good, it’s very hard in the Singapore context to identify any one sector (which) is presenting more opportunities in the listed space than the other.”

There are 20 listed REITs in Singapore and according to some estimates, this may hit 30 by the end of the year. – CNA/ms

Source : Channel NewsAsia – 25 Feb 2008

Join The Discussion

Compare listings