Wednesday, June 23, 2010

Harder for Reits to find good property

THE global recovery is making it easier to raise money for real estate investment trusts (Reits) but harder to find good properties to buy, according to industry experts.

They said the credit crunch affected many Reits over the past two years but the market is starting to recover as money flows back to rapidly growing Asia.

The difficulty now is locating attractive properties to buy. There is 'a lot of money but few big assets' in Asia, said Ascendas Funds Management chief executive Tan Ser Ping.

Reits invest in a variety of properties from industrial factories and warehouses to office buildings and shopping malls.

But office buildings are expensive to build while rents in Singapore and Shanghai are experiencing a slow recovery, said Mr Ng Beng Tiong, the chief executive of ARA Managers (Asia Dragon), which manages the ARA Asia Dragon Fund. Industrial spaces are more attractive, he added.

Mr Ng said he expects China to have 'high growth rates for many years' with investment in retail space poised to surge as domestic spending rises. He and Mr Tan were speaking at the 2010 Asian Real Estate School & Symposium, organised by the Sim Kee Boon Institute for Financial Economics and held at the Singapore Management University on Monday.

Singapore is Asia's third largest Reit market after Japan and Australia, with more than 20 listed Reits.

Source: Straits Times, 23 Jun 2010

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