HSBC expects the number of Asia’s real estate investment trusts (REITs) to increase over the next three to four years due to demand for more risk-averse real estate investments, according to a senior executive.
Asia is seeing a boom in the REIT IPO market in 2010, with the recent listing of Cache Logistics Trust in Singapore, while Sunway City intends to list its REIT in Malaysia next month.
Jason Kern, HSBC’s managing director and head of real estate advisory for Asia Pacific, said: "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 expects the Singapore government to see the most activity, with almost 20 more companies from around Asia likely to be listed in Singapore over the next three to four years.
The country has over 20 listed REITs, including several from foreign firms like Ascendas India, and Fortune and Saizen from Hong Kong.
Malaysia is also showing signs of growth, while Australia could see a few more, he added.
REITs mainly invest in commercial property and pay rent collected from its developments to shareholders as dividend, and several investors consider them as safer investments rather than property stocks.
REITs usually offer returns which are higher than yields of government bonds.
"What I find in my space is that investors are more risk-averse for sure. They are more defensive," said Mr. Kern. "We actually still find very strong demand at the most defensive end of the spectrum, which are the REITS.