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Singapore’s real estate investment trust (S-REIT) sector has grown to become Asia’s second biggest REIT market, boasting 43 entities collectively valued at around S$70 billion, reported TODAYonline.
“The pro-business and supportive regulatory regime in Singapore have laid a solid foundation for the REIT industry,” said Wilson Tan, CEO of CapitaLand Mall Trust Management, which oversees CapitaLand Mall Trust (CMT), the first REIT floated on the Singapore Exchange (SGX).
CMT’s transformation attests to the “remarkable” growth of the S-REIT sector. During its listing 15 years ago, the trust raised over S$200 million, and its portfolio only consisted of three properties: Funan The IT Mall, Tampines Mall and Junction 8 Shopping Centre. But it now holds 16 shopping malls, making it the largest REIT and shopping mall operator on the local stock exchange with a market capitalisation of about S$7 billion.
Moreover, Singapore’s REIT sector has the potential to equal or even surpass that of Japan, Asia’s largest REIT market. Currently, there are 56 trusts listed on the Tokyo Stock Exchange worth a total of US$100 billion (S$143 billion).
“While one can argue that Japan is much bigger than Singapore in terms of size, population, economy, we must recognise that REITs are a borderless industry and need not be constrained by the size of the country,” said Sonny Tan, CEO of the REIT Association of Singapore (Reitas).
S-REITs have a more global presence, with 30 of them owning assets outside the country.
In comparison, Japanese REITs’ assets are almost purely domestic. “Unlike Japan, REITs in Singapore are allowed to own overseas properties from day one. The regulatory framework here is also less complex.”
However, the outlook for Singapore’s REIT sector is cautiously optimistic in 2017.
“The second half of 2016 ended relatively mixed, and as the world is grappling with how Brexit and the Trump administration will affect the global economy, so too will Singapore’s capital markets and economy be tied to how events turn out globally and regionally,” noted Leonard Ong, Head of Property Tax Advisory at KPMG.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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