Singapore REITs more picky in local market

Only 7 in 25 newly acquired assets are located in Singapore.

According to CBRE Asia REIT ViewPoint, since the onset of the global financial crisis in late-2008, Asian REITs have been increasingly active in the regional commercial property investment market. Asian REITs' contribution to total investment turnover in the region increased from 11% in 2009 to 22% in 1H 2012. Japanese and Singaporean REITs have been the most active purchasers, accounting for 53% and 33% respectively of acquisitions completed by Asian REITs since 2009.

Here's more from CBRE Asia REIT ViewPoint:

The first half of 2012 saw a continuation of this trend as Asian REITs remained a significant buying force. J-REITs turned more aggressive towards acquisitions during the period and continued to benefit from the support provided by the Bank of Japan's Asset Purchase Programme, which was extended by a further JPY 10 billion to JPY 110 billion in April.

S-REITs remained in a buy mode aborad during 1H2012, acquiring assets in Australia, China, Japan, Malaysia and South Korea, but turned more selective towards purchasing properties in their domestic market. Of the 25 assets newly acquired by S-REITs during the first six months of 2012 just seven were located in Singapore.

Asian REITs' buying spree comes amid rising investor confience in the sector as REITs have outperformed the broader stock market and delivered steady revenu growth and high dividend yields over the past two years.

Growth momentum among S-REITs was led by asset acquisition strategies and rental appreciation along with the overall market trend. Excluding those S-REITs whose total investment acquisition between 2008 to 2011 was over 50% of their market capitalisation as at the end of 2007, the total rental revenu of S-REITs recorded annual growth of 5.8% between 2008 and 2011.

Over the past two years, S-REITs ahve shifted from an aggressive acquisition mode to a focus on portfolio enhancement. Investment volume by S-REITs dropped 60% in 1H2012 compared to 2H2011. During the period, a number of S-REIT untiholders raised concerns about the low yields recorded fro some domestic acquisitions that could subsequently dilute distribution yields.