REITs expected to enjoy boom time

KUALA LUMPUR: Real Estate Investment Trusts (REITs) in Asia, including Malaysia, are expected to be more active this year as investors worldwide are on the lookout for yields under a low interest rate environment.

Experts project that millennials and the growing Asean middleclass will continue to pave the way for REITs, specifically in family housing and offices.

According to iFAST Research, the market is expected to grow as nascent markets, such as the Philippines, Taiwan and Indonesia, have yet to see listed REITs.

“This group represents the next wave of REIT markets, as regulatory and legislative issues must be ironed out before the REITs market can move forward.

“Many of these countries are still developing in areas such as country risk, ease of doing business and property-level transparency,” the research house told NST Business.

According Bloomberg data, as of January 31, market capitalisation of the entire listed REIT market in Asia stood at about US$294 billion (RM1.3 trillion), accounting for about 18 per cent of the total global REIT market capitalisation.

iFAST Research said the size of the Asian REIT market has grown at an annualised nine per cent growth rate over the past three years.

In 2014, Asia accounted for US$7 trillion in investable real estate, which was about 25 per cent of the global market. This is expected to grow to US$17 trillion by 2020, to capture around 35 per cent of the global market.

Last year, Asian REITs markets posted a healthy 15.9 per cent return to investors, as represented by the S&P Pan Asia REITs Index.