The REIT way to recovery in the Asia-Pacific – The Property Chronicle
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The REIT way to recovery in the Asia-Pacific

The Analyst

Extraordinary government support for REITs is boosting economies across the region.

Economic recovery is beginning for most of the Asia-Pacific region, with stock markets now much more resilient in the early stages of reopening than had been predicted. It is not a completely unexpected outcome, despite the continued uncertainty regarding the development and timing of a vaccine. Most countries are easing restrictions; only Australia, Hong Kong and the Philippines have extended such policies in response to a resurgence in Covid-19 cases. Furthermore, much of the region has benefited from continuing fiscal support, as well as strong financial conditions prior to the pandemic, with most of the region’s central banks having the ability to ease monetary policy and push rates to record lows or near.

The region’s real estate investment trusts have been beneficiaries of extraordinary government support. In Singapore, authorities loosened requirements in April for distributions to be made by up to 12 months. Regulators also raised the leverage limit to 50% for the island’s REITs and deferred to 2022 a new minimum interest coverage ratio requirement. Similarly, the Securities Commission Malaysia announced that it will temporarily increase the gearing limit for Malaysian REITs from 50% to 60% until the end of 2022. Such measures are aimed at providing REITs with greater flexibility to manage their cash flows and raise funds amid a challenging operating environment.

We estimate that China’s REIT market could conservatively be worth initially as much as $600bn to $800bn in market capitalisation

The Analyst

About Sigrid Zialcita

Sigrid is the Chief Executive Officer of the Asia Pacific Real Estate Association (APREA). Based in Singapore, she is responsible for overseeing the strategic direction, initiatives and operations of the association across the Asia-Pacific.

Articles by Sigrid Zialcita

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