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Singapore’s REIT market saw market value growth and an average total return of 7.0%
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India’s REIT market witnessed the steepest rise in total market value at 31%
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The Chinese mainland market issued seven new REIT products in the first four months of 2024
Cushman & Wakefield, a leading global commercial real estate services firm, has published its eighth annual edition of the Asia REIT Market Insight report series. The new report underscores the overall dynamism of Asia’s Real Estate Investment Trust (REIT) markets and demonstrated resilience in several markets. The traditional REIT market powerhouses of Japan, Singapore, and Hong Kong China (“Hong Kong”); continued to dominate the market, with a combined share of more than 80% of the total Asia REIT market value. However, the emerging Chinese mainland and India REIT markets, as the fourth and fifth largest in Asia respectively, are adding new layers of opportunity and growth.
Cushman & Wakefield data shows that a total of 225 REIT products were active in the Asia market at the close of 2023, with a combined market valuation of US$252.1 billion, down 7% on the prior year. Looking at market value performance in 2023, the India REIT market witnessed the steepest rise in total market value at 31% year-on-year, partly driven by the introduction of the Nexus Select Trust. Singapore’s REIT market also saw growth, with a 4% expansion in market value, making it the sole market in the top three to see an uptick in value. In contrast, the Hong Kong and Japan markets endured declines in their US$ REIT market values, by 13% and 9%, respectively. The fall in the Hong Kong REIT market value was chiefly due to a decline in valuations, while Japan’s market value was largely influenced by the yen exchange rate.
Table 1: Total Market Value of Active REITs on Major Asia Exchanges (Dec 2023)
Source: Bloomberg database, compiled by Cushman & Wakefield Valuation & Advisory Services
In terms of total return, while the Singapore REIT market registered a positive average total return at 7.0%, Japan and Hong Kong recorded negative returns in 2023, at -0.3% and -23%, respectively.
However, both Japan and Hong Kong have shown improvements in total returns in the recent months of 2024.
James Young, Head of Investor Services, EMEA & APAC at Cushman & Wakefield, said, “The evidence shows that REIT valuations tend to adjust faster to macroeconomic changes when compared to the private market. Consequently, REITs often offer higher dividend yield returns, although their total return is subject to greater fluctuation. Investors can benefit from sector-specific strengths, with industrial and logistics, and multifamily REITs standing out for their superior risk resilience. The data center and healthcare sectors also continue to show robust performance.”
The Chinese mainland REIT market experienced a slowdown in issuance and a decline in stock prices in 2023. However, with new policy initiatives, including interest rate cuts and more flexible financing options for public infrastructure REITs, the market saw an uptick in issuance volume in the first four months of 2024. A total of seven new REIT products were issued, including the first batch of four consumer infrastructure REITs backed by retail assets. Additionally, in June 2024, the China Securities Regulatory Commission (CSRC) approved the listing of the ESR China REIT, comprising three logistics assets, reflecting government support for REIT products sponsored by international investors in the Chinese mainland.
In India, the nation’s first publicly listed retail REIT, Blackstone's Nexus Select Trust, was listed in May 2023. It has a portfolio of 17 retail assets spread across Tier I and Tier II cities; the stock price has risen nearly 30% in one year since its IPO.
Catherine Chen, Director of Capital Markets Research, Asia Pacific, Cushman & Wakefield, said: “For emerging markets like Vietnam, diversification can be key to success. The REIT markets in Japan, Singapore, and Hong Kong have all shown that diversifying investments in different types of underlying assets can lead to more stable returns.
The REIT market in Vietnam is relatively new, Vietnam can learn from the three leading markets and aim for a balanced portfolio with a combination of different types of real estate. In addition, investors and fund operators need to pay attention to interest rates, as changes in interest rates can greatly affect the performance of the REIT market. Moreover, they can consider expanding into new property sectors or regions to explore potential growth opportunities.”
- Access the 2023-24 Asia REIT Market Insight report online here
- PDF version available on request (7MB)