Since beginning this year, we have seen many Malaysian companies looking at REIT as a strategy to unlock value for their assets whether its real estate, hospital, hotel, resort or plantation.
It might of interest therefore to look at the history of REIT in Asia:

Do you know that Japan is the first country to launch REIT?
 

Japan:
It happened when there was a revision of the Investment Trust Law in November 2000 which subsequently paved the way for the launch of the first REIT in Asia in Japan which is the Nippon Building Fund Inc and the Japan Real Estate Investment Corporation both began trading on the Tokyo Stock Exchange (TSE) in September 2001
Todate of writing, Japan now has 39 REITS listed in its stock markets whether in Tokyo or Osaka. Almost all participants are Japanese conglomerates from the banking, insurance, corporate and real estate sectors, with the exception of UBS Asset Management.
( In 2005 - There are currently 22 J-Reits trading on the TSE and one J-Reit trading on the Osaka Stock Exchange (OSE), The market capitalisation of Japan’s 23 listed Reits stood at 2,600 billion yen (S$36.8 billion) as at end-September 2005, which is relatively small compared with Japan’s non-Reit property market. As at Q3 2005, the average dividend yield for J-Reits was about 3.3 per cent, or nearly 185 basis points (bps) higher than the yield on 10-year Japanese government bonds. However, the spread has been shrinking in the past few years, from an initial 4 per cent in 2001 to around 2 per cent currently. As such, rising interest rates may cool the J-Reit market, especially in the midst of rising stock prices. )

Singapore:
Singapore’s first Reit, CapitaMall Trust (CMT), was listed in July 2002 with a subscription rate of 3.41 times for its initial public offer (IPO).
Currently, there are XX S-Reits trading on the SGX.
(Year 2005 -Cambridge Reit, with a portfolio of industrial buildings worth S$400 million-S$600 million, is poised to become the eighth listed property trust and the first that is not backed by a major developer. The seven Reits had a market capitalisation of S$10.88 billion at end-September.)

Todate of writing, the Singapore government has revised Reit-related policies like gearing ratio  to make the market more attractive to both local and foreign Reit players. Subject to certain guidelines, partial ownership of investment properties is allowed to make it easier for S-Reits to buy assets in the region where laws require overseas investors to have a local partner.

Hong Kong:

The Securities and Futures Commission (SFC) of Hong Kong issued guidelines on Reits in July 2003. After several hiccups, the Hong Kong Housing Authority’s Link Reit, which is also the world’s biggest property trust, made its trading debut on the Hong Kong Stock Exchange on Nov 25 with a 15 per cent premium over its IPO price.
Hong Kong may also become a listing hub for both local and foreign Reits, especially those from mainland China. Following the lifting of restrictions on cross-border property investment and the increase in gearing ratio from 35 per cent to 45 per cent, a number of mainland developers are currently looking to list their Reits in Hong Kong. However, the lack of tax transparency remains the main inhibitor to the growth of its Reit market.

Malaysia

The Securities Commission (SC) released its Guidelines on Real Estate Investment Trusts in January 2005. This highlights the government’s efforts to accelerate the development of such investment vehicles, following the success of Reits in other regional countries. The Reit guidelines supercede the earlier guidelines on Property Trust Funds issued in November 2002. Since the listing of Axis-Reit (offices and warehouses) in August ‘05, quite a number of new REIT has emerged.

Thailand

The country’s first and largest retail Reit, CPN Retail Growth Property Fund (CPNRF), was listed on the Stock Exchange of Thailand in August this year. The IPO was oversubscribed, indicating investor enthusiasm. At a price of about 11 baht (S$0.45), its dividend yield for 2006 is estimated at 6.9 per cent. However, gearing is not permitted and this restricts development of the Thai Reit industry.

China

The lack of clear regulatory support remains the main obstacle in developing China’s Reit market. In addition, although rating agencies are getting up to speed in China, it is still difficult for them to rate various collateralised instruments. On the other hand, given its market size and fast-growing real estate market, the China Reit market should eventually kick off in the next one to two years.

(Source: The Business Times Online ( 29 Nov 2005))

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