In a recent forecast by HSBC, the landscape of Real Estate Investment Trusts (REITs) is anticipated to significantly expand across Asia in the next three to four years. This growth is largely fueled by rising demand for investments within properties that present lower risk.
REITs specialize in commercial real estate, primarily, channeling rent income from their holdings back to shareholders in the form of dividends. Consequently, many investors view these trusts as a safer alternative compared to property stocks.
Moreover, REITs often yield higher returns than traditional government bonds, presenting an attractive option for cautious investors.
The activity surrounding REIT IPOs has surged this year, particularly within Asia, thanks to successful listings such as that of Cache Logistics Trust in Singapore. Furthermore, plans for a REIT listing by Sunway City in Malaysia are set to unfold in July.
At the Reuters Global Real Estate and Infrastructure Summit held recently, Mr. Jason Kern, the Managing Director and Head of Real Estate Advisory for Asia Pacific at HSBC made a compelling statement:
"I see proliferation of REITs, absolutely. I think we’ll have twice as many REITs in Asia as we do today in the next three or four years."
Mr. Kern anticipates significant activity in Singapore, predicting more than 20 new REITs to be listed in the forthcoming years, sourcing from various companies throughout Asia. Currently, Singapore boasts over 20 listed REITs, including notable names like Fortune and Saizen from Hong Kong and Ascends from India. There’s also observable growth in markets like Australia and Malaysia.
He went on to add, "What I find in my space is that investors are more risk-averse for sure. They are more defensive. We actually still find very strong demand at the most defensive end of the spectrum, which are the REITs."
This promising trend points towards a favorable future for real estate in our region as well.