Outlook for Asia-Pac Reits better

Survey: more expect existing Reits to expand and new ones to be launched

THE outlook for Asia-Pacific real estate investment trusts (Reits) has improved significantly this year, going by a poll of property market players.

More respondents expect existing Reits to expand and new ones to come on stream. Many also see Singapore offering the most potential for Reits to develop.

Corporate trustee The Trust Company and law firm Baker & McKenzie conducted the 2010 Asia-Pacific Reit Survey from January to March, polling 140 people including property owners and fund managers.

Asked to predict what the Reit industries in 13 Asia-Pacific markets such as Singapore, Australia and Japan will look like in the next one to two years, 47 per cent of respondents said that existing Reits will grow in size. Another 20 per cent expect to see companies launch additional Reits.

The proportion of optimists this year is far larger than that last year. When the survey was conducted during the economic downturn, just 20 per cent of respondents thought existing Reits would expand, and a mere 3 per cent felt that there would be new ones.

'Although the short term outlook has not recovered to pre-global financial crisis levels, positive sentiment is improving,' the survey owners said in a report.

Respondents also rated the 13 markets on their potential for Reits, and Singapore retained pole position from last year with the highest median score of 62 out of 100.

Australia was a close second with 61 points, and China came in third with a score of 56. Hong Kong was in fourth place and Japan ranked ninth.

Participants assessed real estate growth prospects, opportunities and regulatory support in the 13 markets to arrive at the scores. Singapore came out tops in offering regulatory support, but seemed less attractive than China, India and Australia in terms of how much its property sector could grow.

There is 'strong opportunity in China but it will take a while before things happen as China's legal and tax framework needs to be developed a lot more to make a Reit successful', the survey owners said.

Meanwhile, respondents see 'adverse taxation developments' as the biggest threat to Reits. What they feared most last year were the 'effects of financial engineering'.

Source: Business Times, 24 Jun 2010