ST: Reits 'unlock capital, create jobs' in Asia

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#1
Reits 'unlock capital, create jobs' in Asia

Positive findings in new report, despite recent Reit criticism

Published on Mar 05, 2014


The Marina Bay area with the Suntec Singapore Convention and Exhibition Centre on the left. Suntec Reit's ''well executed'' upgrading of Suntec City makes it CIMB's top Reit pick. -- ST FILE PHOTO

By Melissa Tan

REAL estate investment trusts (Reits) have brought significant benefits to Asian economies, an association promoting regional real estate investment said yesterday.

Reits - a big hit among Singapore and regional investors in recent years - have faced both criticism and stock market price pressure in recent times.

They have been blamed in some quarters for rental hikes that push up business operating costs, especially for smaller firms.

One of the benefits that Reits bring to Asian economies is that they let institutional and retail investors buy into income-generating real estate, said the Singapore-based Asia Pacific Real Estate Association yesterday.

Reits also attract capital, enjoy a relatively low cost of capital and have helped to improve market transparency and the quality of real estate assets, it added. "They unlock capital, generating additional economic output and creating more jobs."

These findings come from a report that has not been finalised yet, the association's chief executive, Mr Peter Mitchell, told The Straits Times over the phone.

He said the association surveyed 200 to 300 people around the globe, including investors, Reit managers and developers, in the first quarter of last year.

Mr Ken Atchison, managing director of Atchison Consultants and one of the report's authors, said the introduction of Reits in Asia "has and, in the future, will broaden and deepen capital markets" in the region.

"This will reduce dependency on short-term bank lending by mobilising longer-term capital."

Association chairman Lim Swe Guan noted Asian Reits have seen "phenomenal growth" in the past decade: The first Asian Reit was set up in Japan in 2001 and there are now seven Reit markets in Asia boasting a combined market capitalisation of more than US$138 billion (S$175billion).

Reit prices have been weighed down lately by fears of rising interest rates, which make them less attractive as a yield play.

CIMB research head Kenneth Ng said in a note yesterday that the house was neutral on the Reit sector in Singapore. On the one hand, many Reits can be bought relatively cheaply and offer high yields and high occupancy rates. They also have relatively low debt and do not need immediate refinancing. On the other hand, there is a "lack of clear growth drivers" and the threat of rising interest rates, he said.

Real estate assets have also become more expensive owing to stiff competition, which lifts the risk that Reits may make acquisitions that do not add much value.

"More Reits have highlighted the difficulty of choosing between expensive acquisitions and no growth," Mr Ng said.

CIMB's top pick in the sector is Suntec Reit due to its "well-executed" upgrading of Suntec City.

Reits could also come with higher costs for businesses. They may bump up rents as their managers are under pressure to grow rental revenue. The rise in business costs could add to inflation.

Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said last month that "in the institutional landlord space, we are seeing signs of a bit of a cartel in operation".

"We do have limited real estate space in Singapore and, very often, we're hearing anecdotes of very draconian measures on individual tenants by institutional landlords," he said, according to a Business Times report.

melissat@sph.com.sg
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#2
referring to article.

jobs - what kind of jobs created? number of jobs? how to account for those jobs lost thru higher rentals?

cartel - cartel already there. All controlled by the big T.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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#3
Only gd thing that come out of it is that it allows singaporean to hv another source of passive income
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#4
A mall is a mall. besides investment bankers, REIT CEOs / CFOs, IR managers

The rich get the big fat meat. The mass suffer price increase.

Even the few MPs highlight side effects!!!
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#5
At the end of the day, the findings will tie back to who is the one issuing the report -Asia Pacific Real Estate Association. Definitely not an independent third party IMHO.

If i wanted to point out the bad stuff regarding REITs, i can also come out with a report saying that the shopping centers that belong to REITs have forced out most of our small local shops. The brands which i see i most shopping center are mostly the same big players like G2000, Cotton On, Crabtree & Evelyn, Guardian, Giordano and so on.............

Dodgy
There are no good stocks. Stocks are only good when they go up after you bought them.
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#6
Reit is an business entity, not charity organization. Reit can go bust if not properly managed. End of the day, it is the demand and supply that dictate the rental.
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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#7
I notice Jurong Point there are some tenants which have moved out. Probably rental too high and cant take it anymore. Last weekend, my wife went to a salon there for a hair cut. She told me the salon increased price by S$10 because their rental has increased. I dunno how much is her hair cut cos she refused to tell me when i asked. Scared i nag at her again probably. Assuming S$35 for a cut there, a $10 increase is a lot.
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#8
Ultimately boils down to whether the reits can build up the mall with vibrancy and sensible variety to attract the crowd. A $20 psf space in Vivo is more valuable than a $5 psf in a mall like Bukit Timah Shopping Cte

And yes it demand and supply too. It will come a time the landlord can squeeze no more
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#9
(05-03-2014, 11:42 PM)Bibi Wrote: I dunno how much is her hair cut cos she refused to tell me when i asked. Scared i nag at her again probably.

After her haircut, she will look good standing beside you mah, dun nag lah.

You can consider to become a shareholder of Lee Kim Tah instead.
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#10
(05-03-2014, 11:42 PM)Bibi Wrote: I notice Jurong Point there are some tenants which have moved out. Probably rental too high and cant take it anymore. Last weekend, my wife went to a salon there for a hair cut. She told me the salon increased price by S$10 because their rental has increased. I dunno how much is her hair cut cos she refused to tell me when i asked. Scared i nag at her again probably. Assuming S$35 for a cut there, a $10 increase is a lot.

$35 for a haircut is cheap for a woman!
Everytime my wife went into supercut no $300 no tok. I cut at ECcut $12...

When i read the headline i thought i read unlock capital for the owners and create job for reits mgr...whahaha.
The thing about karma, It always comes around and bite you when you least expected.
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