Fund manager Henderson Global Investors is upbeat about the global property and real estate investment trust industry.It says while REITs were introduced into most Asian countries only recently, demand has led to the industry growing by some 2.5 times in 2005 over the previous year.
REITs are fast becoming an important asset class for investors.
This is the view of Henderson Global, which has some US$116 billion worth of assets under its management worldwide.
Henderson says REITS are attractive to both institutional and retail investors because of the ability to deliver high and stable yields.
Patrick Sumner, Head Property Equities, Henderson Global Investors, said, “We do see strong growth in office rents in the main financial centres around the world – New York, London, Hong Kong, Tokyo for example, but also in the other cities as well.
“Secondly it’s the growth in investor demand. And because of the numbers of people of that ageing population who are looking for yield that they can get from property, we see long-term sustainable growth in the demand for property as an investment class underpinning the value of these investments.”
Henderson says the REIT market in Singapore is also getting a boost because the investment instrument is not taxed here.
Demand for office space is also expected to rise exponentially over the next few years because of major projects such as the Marina Bay Financial Centre and the integrated resort there.
Chris Reilly, Director Property Equities, Asia Pacific, Henderson Global Investors, said, “We’re seeing better rental growth coming through in the office sector. I think we’ll continue to see growth in the office sector and obviously in the longer term, we need to consider what the supply outlook looks like and the land supply that’s brought into play.”
The overall REIT market capitalisation in Asia stands at US$13.6 billion, with Japan contributing 64 percent share of the pie.
This is followed by Singapore with 19 percent and Hong Kong with 13 percent.
Going forward, the fund managers are optimistic that the industry will grow by some 12 to 15 percent globally next year.
While not speculating on the performance of the Asian market, they are confident that it will outperform the American and European markets.
Source: Channel NewsAsia, 09 October 2006