Published July 6, 2007

Singapore's Reits seen doubling to 30 by 2008

SINGAPORE'S real estate investment trusts are expected to double to about 30 by the end of 2008 as more property owners raise funds in the city-state to expand, the Asian Public Real Estate Association said.

The new trusts will include so-called cross-border Reits, or trusts that hold assets in markets outside Singapore, said Peter Mitchell, the trade group's chief executive officer. Singapore has already attracted trusts such as billionaire Li Ka-shing's Fortune Reit, which owns Hong Kong malls.

'We're seeing new development and redevelopment activity, and greater quality building in retail, industrial and office' being built in Asia, Mr Mitchell said yesterday in an interview in Singapore. An increase in the number of Reits will 'actually increase the amount of capital coming into the region'.

Property owners are using Reits to raise cash amid soaring investor demand for real estate, which has offered twice the average return of stocks.

Jakarta-based Lippo Group said last week it plans to sell as much as US$5 billion of assets to new property trusts in Singapore.

Other than Singapore, Hong Kong could emerge as a centre for cross-border Reits, he said. Hong Kong, which has about six trusts worth more than US$8 billion, trails behind Singapore, whose 16 publicly traded Reits have a combined market worth of US$19 billion.

'The Reit market will easily reach more than US$500 billion in a few years' in Asia, Mr Mitchell said. 'This is a huge market that Hong Kong could take a significant share of.'

Other Singapore trusts with foreign assets include CapitaRetail China Trust, which owns seven malls in China managed by South-east Asia's largest developer, CapitaLand Ltd.

In China, a law that establishes a Reit system may be introduced next year, he said.

He also expects India to introduce a 'Reit-type law' by the end of this year. The group is working with authorities in Pakistan, Indonesia, the Philippines and China to develop their Reit markets, Mr Mitchell said. - Bloomberg