Executives Find Singapore Appealing For Property Acquisitions
SINGAPORE – The CEOs of Manulife US REIT and Lendlease Global Commercial REIT consider the city-state as an attractive target both for raising capital and for real estate acquisitions, according to a recent report from Mingtiandi.
In fact, during an earlier panel at the Mingtiandi Singapore Forum, Canadian companies Oxford Properties and Ivanhoe Cambridge revealed that they are considering to increase their investments here as the value of local properties continue to increase.
“I think (the city-state’s attractiveness for raising capital and for property acquisitions) creates a huge opportunity for Singapore-based REITs because they are looking to capitalise on AUM growth – they’re looking to grow their assets under management all the time,” said Tim Graham, Head of international capital for Asia Pacific at Jones Lang LaSalle (JLL), who was a panellist at the forum.
Lendlease Global Commercial REIT’s CEO Kelvin Chow pointed out that Singapore has an advantage as a financial hub, in addition to its governance standards and clear regulatory environment.
“Except for Japan, I think Singapore is one of the largest (REIT markets in Asia due to its) good transparency. It’s actually a good environment for investors to come into. It’s well plugged into Europe, the US and Asia.”
Moreover, Singapore REITs (S-REITs) are playing a growing role on the global stage.
As at 30 June, more than 90 percent of S-REITs and property trusts both by number and market cap hold real estate outside Singapore in Asia Pacific, South Asia, the US, and Europe, based on statistics from Singapore’s REIT Association. Also, around 41 percent of S-REITs’ property portfolios are composed entirely of offshore assets.
“If you look at the rate of growth of the S-REIT market by market cap, it’s grown 13 percent per annum for the last ten year, so we’re now in a position where the S-REIT market covers $100 billion (in assets under management or AUM),” noted JLL’s Graham, adding that nearly half of that AUM is overseas.
In addition, Singapore-listed REITs have been more resilient. “I think comparatively speaking, S-REITs have been holding up relatively well compared to our peers in the US,” said Manulife US REIT’s CEO Tripp Gantt.
“I think the FTSE S-REIT index is down by about 15 percent so far in the year to date, (and) we’re looking at maybe twice that in the US and Australia.”
But while S-REITs continued to do transactions in September, Lendlease REIT’s Chow revealed that it’s now harder for them to buy a good piece of real estate, unless they consider second or third-tier properties.
“If it’s a good asset, it wouldn’t sell for cheap,” said Chow, who manages a portfolio, of which 88 percent of assets by value are located in Singapore.