Asia's real estate investment trust (REIT) market is expected to make a strong showing this year after its lukewarm performance last year, Standard & Poor's Index Services said in a report issued yesterday.
Although the Asia REIT market began with high expectations last year, its performance was disappointing compared to other regions because of the lower-than-expected performance of the Hong Kong REIT market, the Quarterly Global Property and REIT Report said.
Estimates suggest that this region is undercapitalized, with only 4 percent of assets under REITs versus 60 percent in Australia, according to the report.
"Although global demand for REITs, and specifically for Asian REITs, continues to grow, many markets in Asia either do not have a REIT structure or if they do, the structure does not pass muster with international standards," said Alka Banerjee, vice president of S&P's Index Services.
Taiwan began issuing REITs several years ago, with Fubon Financial Holding Co (
S&P said emerging markets were the surprise performers in the property segment last year.
Though capitalization from this region is still only US$93 billion, the S&P/Citigroup Emerging Market Property Index grew more than 77.8 percent for the year on the back of strong gains in Poland, China and Southeast Asian countries, the report showed.
"The REIT industry is still in its nascent stages in emerging markets, with legislation only in South Africa, Malaysia, South Korea and Turkey. However, as the global appetite for REITs continues to spread in the medium term, we should see growth in the Middle East, India, China, Africa and Latin America," Banerjee said.
S&P predicted that cross-border REITs will grow. Singapore's Capital Land expects to launch S-REITs out of China, India, the Philippines and Thailand.
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