Asia Pacific REIT Markets Reach New High in March, Driven by Japan and Recent IPOs

The Asia Pacific and Asian REIT markets leapfrogged the US$250.0 billion and US$150.0 billion thresholds during March to scale new highs of US$265.0 billion and US$162.0 billion respectively, according to the Asia Pacific Real Estate Association (APREA).

In its latest Asia Pacific REITs monthly report, APREA said that regional REIT markets have had an excellent start to the year – a welcome change from 2012 when concerns over the eurozone debt crisis kept markets depressed.

“The issues with eurozone debt have not disappeared; but they have been with us for more than a year now. Investors have had time to adjust their expectations and consequently much of the concern has been priced into markets,” said Peter Mitchell, CEO of APREA.

“The strong performance of J-REITs (Japan) and recent large and successful IPOs are fuelling the current rebound,” he added.

Buoyed by the expansive economic policies of the new Prime Minister Shinzō Abe, Japan’s REIT market has been the star performer in the first three months of 2013, returning 35.8 per cent. It is followed by the Hong Kong REIT market with 9.8 per cent, the Australia REIT market with 5.5 per cent, and 2012’s poster Singapore REIT market with 5.2 per cent.

Also, volatility across the three markets with the exception of Japan is trending down.

Meanwhile, the market has seen some of the biggest REIT listings recently. The new IPOs include Mapletree Greater China Commercial Trust in Singapore, which with US$2,239.0 million is the largest REIT IPO in the citystate.

Other listings include Nippon Prologis REIT Inc and Comforia Residential REIT Inc which listed for US$1,315.0 million and US$447.0 million respectively in Japan, and Asia Pacific Data Centre Group which listed for US$92.0 million in Australia.

At the beginning of this year, the market capitalisation of the Asia Pacific REIT market was US$231.9 billion, with a total of 201 REITs. Excluding Australia and New Zealand, there were 144 REITs with a market capitalisation of US$134.0 billion.

The largest Asia Pacific REIT markets are the Australia REIT (37.6 per cent), Japan REIT (27.3 per cent), Singapore REIT (17.8 per cent) and Hong Kong REIT (9.2 per cent), which together account for 91.9 per cent of the Asia Pacific REIT market capitalisation.

Without Australasia, Japan, Singapore and Hong Kong account for 88.6 per cent of the Asia REIT market capitalisation.

Meanwhile, real estate transaction volumes in Asia Pacific as at 31 December 2012 jumped 35 per cent from the end of third quarter to US$144.4 billion.

The increase was driven primarily by land sales, which rose 42 per cent. Commercial transactions also contributed with 22 per cent higher activity, while apartment and hotel transactions dragged at -57 per cent and -16 per cent respectively.

Stripping out land transactions, Australia led in regional sales volume, accounting for 29 per cent of sales in the fourth quarter. This was followed by Hong Kong with 20 per cent and Japan with 19 per cent.

Cross-border entities were net buyers during the quarter, with a marked 57 per cent increase in acquisition volumes relative to the previous quarter. This brought their share of purchases to 30 per cent in 4Q2012, up from 20 per cent the previous quarter.

Alongside the increase in cross-border acquisitions, local buyers also upped their purchases slightly to make up 60 per cent of acquisition volumes. National buyers’ share of acquisitions declined.

Major transactions in the quarter include Tsuen Wan W Station in Hong Kong, Gome Shangdu Project in Beijing, and 55 Haimen Road in Shanghai.