S-REIT Offshore Property Investments Doubled

S-REIT Offshore Property Investments Doubled In 2021

SINGAPORE – Foreign property investments by Singapore-listed real estate investment trusts (S-REITs) increased by more than 2-fold to US$12.3 billion in 2021 compared to the preceding year, reported Bloomberg on Monday morning (17 January, SGT)

The figure also represents a record high for the past 61 years, as Singapore real estate managers are accelerating their overseas expansions.

In fact, overseas property investments by REITs listed in Singapore, which has the most REITs in Asia outside of Japan, has been rebounding during the COVID-19 pandemic.

This comes amidst a slow reopening and diminishing returns in their home market, combined with the expected Omicron surge, compel S-REITs to seek growth opportunities abroad.

“Singapore’s commercial property REITs may continue to rely on overseas mergers and acquisitions (M&A) to achieve income growth in 2022, especially if Omicron brings more uncertainty on further easing of social and travelling curbs to boost retail and office leasing demand in the country,” explained Patrick Wong, an intelligence analyst at Bloomberg.

The trend favouring a more global property footprint is underscored by the US$3.1 billion merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust that was proposed in December.

Last month, CapitaLand Integrated Commercial Trust also made more asset acquisitions in its second overseas market, Australia, by acquiring office properties.

Sharon Lim, the CEO of Mapletree Commercial’s manager, told the media in December that while investors like the stability their home market offers, her trust needs to be in a better position to take advantage of new overseas opportunities and achieve “meaningful long-term expansion”.

Vijay Natarajan, a property analyst at RHB Research Institute, expects that S-REITs would continue with their overseas property acquisitions, amidst a limited pool of good quality assets and growing competition from global funds

“We expect this trend of overseas acquisitions to continue,” added Natarajan.

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