REITs ex­pected to en­joy boom time

New Straits Times - - Business -

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.

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