*The release on Asia REIT ViewPoint was disseminated in Japan on the date above. Please note that the original report was announced in Hong Kong on March 5.
CBRE released today its Asia REIT ViewPoint, which describes the latest trends in Asian REITs.
Asian REITs active in acquisitions of commercial assets in Asia, but increasingly selective
Cross-border investment by Singapore REITs (S-REITs) increasing
IPO activity by J-REITs accelerates; acquisition activity expected to remain strong
Investor appetite for Asian REITs has increased, as they offer healthy rental income and a positive yield spread. This, in turn, is leading Asian REITs to aggressively invest in commercial property in Asia.
As a result, the main Asian REIT markets - Japan, Singapore, and Hong Kong - all recorded growth of over 30% in 2012, outperforming equity markets as a whole by more than 10 percentage points. Dividend yields for Asian REITs overall fell to 5.1% in the second half of 2012 from 5.8% in the first half, but this was due to rising share prices, with most REITs raising their dividends.
Japanese and Singapore REITs were the most active buyers in 2012, with total acquisitions of US$8.9 billion between them, representing three-quarters of total Asian investment. While S-REITs were selective with their Singapore-based investments, they achieved impressive growth as they sought to expand their portfolios by increasing cross-border acquisitions within the Asia region, and were active in investing in Japan and Australia in 2012. J-REITs sought to increase the geographical diversification of their portfolios, actively buying assets outside of the Tokyo Metropolitan Area.
These acquisitions have reduced the reliance of both J-REITs and S-REITs on their sponsors for acquisitions. In fact, the proportion of J-REIT holdings acquired from sponsors was 73% in 2009, but fell to 47% in 2012. The proportion of S-REIT holdings acquired from sponsors also fell from 73% in 2009 to 44% in 2012.
Against this background, IPOs were also plentiful, and 15 new REITs were listed in 2012, more than twice the number in both 2008 and 2009. This brought the total market capitalization of Asian REITs to US$133 billion.
Particularly notable among these was GLP J-REIT, the largest logistics REIT in Japan and the first REIT listed in Japan by a Singaporean sponsor.
However, there have been no office REIT IPOs in the last two years, reflecting the weak office market in Asia, with retail and logistics REITs having dominated the list of new public offerings.
Investor interest in REITs is expected to persist, and REITs are expected to remain an attractive option for investors seeking investment opportunities in Asian real estate markets. Acquisitions by Asian REITs are therefore likely to remain plentiful, even as they become more selective.
For detailed, please review the "Asia REIT ViewPoint".
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