The 2022-2023 Asia REIT Market Insight report investigates the growing Real Estate Investment Trust market in Asia, examining the primary drivers and state of play in key markets including Japan, Singapore, Hong Kong SAR, mainland China and India.
Within the region, Japan, South Korea and Singapore were the early pioneers in establishing REIT markets. But with strong support from regulatory authorities, nations including Thailand and the Philippines, as well as India, have successfully established their own REIT markets in recent years, encompassing diversified offerings in sectors such as commercial office, infrastructure, warehousing and logistics, industrial facilities, and renewable energy.
Growth in the Mainland China Market
The emergence of infrastructure REITs in mainland China has also brought new changes to the Asia REIT market landscape, and mainland China is now the fourth largest REIT market in Asia. The overall infrastructure REITs market in mainland China experienced stable development in 2022, demonstrating continued popularity with investors. During the period this report section covers, from the end of March 2022 to the end of June 2023, a total of 17 new products were introduced into the public REIT market. The new entrants demonstrated development momentum across seven categories of underlying assets: industrial parks,
warehousing and logistics facilities, industrial plants, affordable rental housing, highways, clean energy, and other ESG-related projects.
Overall, the Asia REIT market experienced declines in stock prices and overall market values through 2022, predominantly due to the influence of the U.S. interest rate hikes. Despite this, the Asia REIT market has still performed better than its U.S. and European counterparts.
Nevertheless, a drop in REIT acquisition and merger activities around mainland China assets in the Singapore and Hong Kong markets has indicated a more cautious view by investors. We have also seen that the persistent effects of the COVID-19 pandemic continue to pose global challenges for cyclical commercial real estate asset sectors, such as hotel, office, and retail. However, the impact of this is becoming increasingly counteracted by growing market attention to new economy sectors, such as modern logistics facilities and data centers, as well as living sectors, extending from multifamily assets to healthcare facilities.
- At the close of 2022 the combined value of the Asia REIT market was at US$263.8 billion, down 14.7% y-o-y. The mainland China REIT market value surged 80% on the back of new product offerings, but the remaining Asia markets all experienced declines in market value.
- Industrial/logistics, healthcare, and data center assets have been favored by investors as new growth drivers in recent years.
- A total of 17 new products were introduced into the China REIT market in the period from March 2022 to June 2023.
- REITs have also proven popular with investors in India. Consequently, we estimate that more than 20% of Grade A office stock in India will be held by REITs by the end of 2024.