FOR IMMEDIATE RELEASE
2019 Set to be a Landmark Year for Real Estate in Asia Pacific
Beijing, China,14 May 2019 – Expectations for the imminent listing of Chinese REITs (C-REITs) are building up in the wake of a recent spate of news that is signalling that the asset class might finally debut on the nation’s stock markets. Indeed, with China’s economic influence, the absence of a listed property trust sector in the country remains a critical part of the jigsaw that is missing from the region’s real estate sector.
Sigrid Zialcita, CEO, APREA, said, “The first Indian REIT debuted this year and we are excited that plans already in motion in China and the Philippines will herald a new era for the region. The REIT framework remains crucial to the sustained development of the region’s emerging economies. The Asian Century cannot happen without a REIT revolution.”
Based on transactional activity, there are currently an estimated US$2.5 trillion worth of properties that can be securitized in China. Using Japan as a benchmark, China’s REIT market could conservatively be worth up to US$400-600 billion in market capitalization, which will make it the region’s largest. Chinese authorities are well advanced in deliberating REITs. With urbanization still in full swing and the pace of GDP growth remaining solid at 6.0-6.5%, China could outstrip the over one-trillion US market eventually.
Sigrid Zialcita, CEO, APREA, pointed out, “REITs in China constitute possibly the single biggest opportunity to occur in the region in recent times.”
Chris Yang, Senior Associate Director, Head of Valuation & Advisory, Beijing, Cushman & Wakefield commented, “Based on our analysis of listed offshore REITs, property assets held by these entities achieved better performance in occupancy rate, total revenue and net operating income, which ultimately benefits investors. In addition, with the role of professional fund managers, as asset managers and financial custodians, critical in facilitating the development of REITs, levels of capabilities within the asset management institutions will also be raised."
The advent of C-REITs will be a game changer that will elevate the listed property sector in the region to the next level. While competition among bourses will heat up, there will also be benefits as more capital will be attracted to the region’s real estate assets. With the globalization of real estate investments, there will be positive spillover effects.
Chen Lijian, Chairman of APREA China Board and Senior Executive President of China Orient Summit Capital, said, “Having an additional conduit for the sector to recycle capital will not only speed up urban growth but will create stability in the real estate market. With a visible exit strategy, domestic and even foreign players will be more confident at pursuing expansion opportunities. Given China’s economic size and influence, C-REIT's coming of age will certainly help attract both retail and institutional investors allocate more capital into real estate.”
Hu Feng, Senior Director of Cushman & Wakefield and Director of Valuation and Advisory Services of North China, agreed: “REITs, as commercial real estate equity investment products, fulfil regulatory requirements to deleverage the real estate sector, which is conducive to reducing systemic financial risks in the market."
Sigrid Zialcita, CEO, APREA, added, “REIT mechanisms automatically impose a level of transparency and governance as well as tax incentives that typically have to be met across jurisdictions. APREA’s vision of establishing a single funds passport to real estate investment in the region is a step closer to realization.”
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Established in 2005, the Asia Pacific Real Estate Association (APREA) is a leading pan-Asia industry association that promotes real estate as an asset class in the Asia Pacific region. The organization represents leading property investors, fund managers, financial institutions, developers and professional groups operating in Asia Pacific. APREA works with governments to open up new real estate markets and improve existing ground rules for doing business. It also champions a more transparent, respected and professional marketplace via its extensive research, industry standards and education programs. APREA’s networking and engagement programs help its members connect to business opportunities in Asia Pacific and beyond. Its members represent more than US$1 trillion of assets under management. APREA’s focus is cross- border investment – both inbound and outbound.