As the third day of the inaugural Cityscape USA exhibition and conference crystallized at the Jacob K. Javits Convention Center in New York City, an afternoon session explored the state of Asian REITs and their impact on the bottom line. Asian REITs are picking up steam due to several reasons, including their ability to provide a pathway to property ownership coupled with their tax efficiency, low-risk possibility because they are highly regulated and attractive annual returns, according to the session\u2019s presenter, Stewart LaBrooy (pictured), executive director & COO of Axis REIT Managers Bhd. Asia currently holds about 11 percent of the global REIT market, with about $83 billion in securitized assets. \u201cOnce the capital markets quiet down and banks get back to lending, you\u2019ll see a huge boom in securitization,\u201d he said. REITs are particularly important in emerging markets because they boost and stabilize capital access and serve as a vital source for attracting long term-investments. \u201cWhen you have REITs in the market (they help) boost the global economy,\u201d LaBrooy said. The infusion of REITs \u201cbrings development (and) increases GDP without the government having to prime the pump every time (there is) a slowdown. These projects start to be self-created.\u201d Of the top 10 Asian REITs, four come from Singapore, four from Japan, and two from Hong Kong. During his presentation, LaBrooy highlighted these markets along with Malaysia. An early player in the Asian REIT competitive landscape, Japan reformed the Investment Trust Law in 2000. Banks, at that time, had about $360 billion in land and property, which had fallen as much as 70 percent in value, according to LaBrooy. \u201cJapan\u2019s banks were giving zero percent interest on deposits,\u201d he said. \u201cWhen the REITs came in, they were offering 4 to 5 percent. From that time you saw Japan\u2019s growth start to pick up.\u201d However, LaBrooy sees Singapore as the country that has done the most to foster REITs in Asia. While its first REIT didn\u2019t get off to a stellar start, the country is now up to 20, with a market capitalization of US$20 billion, he said. The country, which has developed a set of REIT guidelines, provided incentive to the market and continues to encourage cross-border listing. \u201cMost of these (prime) buildings were owned by companies linked to the Singapore government,\u201d he said. \u201cThe Singapore government offered them to the public and foreign investors.\u201d That support enabled Singapore to raise more funds to move into a key market\u2014China. \u201cThey were in China I think 20 years ago when no one wanted to touch them. They were there making contacts with the Chinese government, making sure everything went very well for themselves. When the market boomed, they were ready, and they grabbed all the best bids.\u201d In the case of Hong Kong, the Link REIT, established in 2005, has the distinction of being Asia\u2019s most valuable REIT ever, with a US$2.8 billion offering, according to LaBrooy. Despite such success, the country still trails behind Singapore. \u201cAll those beautiful buildings in Hong Kong are basically all listed already, so there\u2019s not much left over for putting into a REIT,\u201d he said. Malaysia, although one of the first Asian countries to list a trust, doing so in 1989, didn\u2019t do much with it. Regulation was poorly drafted, but following Singapore\u2019s model, Malaysia issued its own guidelines in 2005. The market currently has 11 REITs with US$1.5 billion in capital in the market, according to LaBrooy. In the last six years, the number of REITs in Asia has ballooned from two to 100, LaBrooy continued, adding that while the current market depends heavily on foreign funds, significant trade is taking place within Asia, lessening the dependence on foreign markets. \u201cHousing bubbles have occurred everywhere except in Asia,\u201d he said. And \u201cChina\u2019s growth is driven largely by domestic demand now, not by exports,\u201d he noted, estimating that Asia now comprises about 35 percent of global GDP. \u201cThere\u2019s a big shift in where the growth is happening, and what\u2019s happening on a global basis.\u201d It\u2019s important to note, however, that investors must have exit plans. \u201cIt\u2019s great saying, \u2018I want to invest in China,\u2019 but if you want to take your money out (and you don\u2019t have an exit strategy), at the end of the day you are in real serious trouble.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
As the third day of the inaugural Cityscape USA exhibition and conference crystallized at the Jacob K. Javits Convention Center in New York City, an afternoon session explored the state of Asian REITs and their impact on the bottom line. Asian REITs are picking up steam due to several reasons, including their ability to provide…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1003849502","post","type-post","status-publish","format-standard","hentry","category-regions"],"acf":[],"yoast_head":"\n