Tag Archives: Asia Pacific

Asia To Witness Surge In REITs

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Asian Continent Location Map
The number of Real Estate Investment Trusts (REITs) in Asia is expected to swell over the coming 3 to 4 years according to HSBC because of increasing demand for investments in more risk disinclined properties.

REITs invest in commercial properties mainly and pay rent collected from their properties to shareholders as dividend. This is why some investors see them as safer investments than property stocks.
Another advantage is that they usually offer returns that are higher than yields of government bonds.

The increased activity in the REIT IPO market this year especially in the Asian continent is due to successful listing of Cache Logistics Trust in Singapore. Also Sunway City plans to list its REIT in Malaysia come July.

At the Reuters Global Real Estate and Infrastructure Summit which was held today, Managing Director and Head of Real Estate Advisory for Asia Pacific at HSBC, Mr. Jason Kern had to say,
“I see proliferation of REITs, absolutely. I think we’ll have twice as many REITs in Asia as we do today in the next three or four years.”
He anticipates Singapore to witness most of the activity with more than 20 to be listed there in the coming years from companies all across Asia. It already has more than 20 listed REITs such as Fortune, Saizen from Hong Kong and Ascends from India. Australia and Malaysia are also showing growth patterns.

Kern further added, “What I find in my space is that investors are more risk-averse for sure. They are more defensive. We actually still find very strong demand at the most defensive end of the spectrum, which are the REITS.”

This Trend is only to bring fortune to our Country as well.

Bangalore is just about office… office.

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While demand for residential space was mostly sluggish in 2011, demand for office and retail space remained healthy in Bangalore.

The market for commercial space is estimated at 50 mil sq. ft. across the country. The average yearly absorption rates in Bangalore and NCR are about nine mil sq. ft. While six mil sq. ft. is absorbed in Mumbai, the rates are 4 to 5 mil sq. ft. each in Chennai and Hyderabad.

However, last year, Bangalore topped the list with the highest absorption of more than 13 mil sq. ft. of non-captive office space, about 2 mil sq. ft. more than the levels seen in 2010. About 80% of this came from the IT & ITES sector.

“Consolidation of real estate portfolios by Indian and MNC IT companies has boosted the real estate market in Bangalore,” said Karun Varma, MD (Bangalore and Kochi), and Jones Lang LaSalle India. “Demand for back offices and contact centres has resulted in continued strong growth in suburban real estate development, with IT companies lining up their investments for setting up new facilities in the city,” he added.

Experts predict demand for 16 mil sq. ft. of office space in 2012 in India’s Silicon Valley, which will be the highest ever in the country. This will be mostly due to the new SEZ norms and direct tax code (DTC) that will come into play.

About 75% of the 16 mil sq. ft. office space will be in upcoming SEZ regions. Recently, global investment banking firm Goldman Sachs took up 1 mil sq. ft. of office space developed by Kalyani Developers on the outer ring road. “Companies see an opportunity from a tax break perspective; so, many are planning to migrate their future work to SEZ parks,” said Shrinivas Rao, CEO (Asia Pacific), Vestian Global Workplace Services.

In the next three years, an additional 28.8 mil sq. ft. of office space will be available in the region, for which projects are already under way. “We are expecting to see about 6 to 7 mil sq. ft. of this to come up in 2012,” said Rao.