The development of real estate investment trusts in Asia

Abstract

Nowadays, property securities (indirect property) have been an important vehicle for investors to invest in commercial real estate at a global platform. Comparing to direct property ownership, they bring unique advantages to a property investment, such as high divisibility and liquidity, lower cost, professional management skills and expertise, and more flexible portfolio diversifications. These factors essentially make property securities an increasingly important asset in strategic investment by institutional investors, as well as retail investors. Among the variety of securitised property investment vehicles, listed Real Estate Operating Corporation (REOCs) and listed Real Estate Investment Trusts (REITs) are two key indirect property investment vehicles. Given that the emergence of REITs is significant in various Asian markets, the landscape of property investment in Asia has improved and reshaped. The establishment of Asian REIT markets not only strengthens the development of property securities market in Asia, but also makes a big step toward the global property securities arena. Therefore, the author was motivated to conduct this research, which focuses on the emerging Asian REIT markets. The overriding theme of this research is to present a profile of the significant development of REIT markets in Asia, empirically assess the performance via developing a series of Asian REIT benchmarks. Furthermore the evaluation of Asian REITs in local mixed-assets portfolios, as well as Asian REITs in global REITs portfolios, explores the potential diversification benefits via adding Asian REITs. Therefore, findings from this empirical research could confirm the portfolio consideration and provide strategic implications via strategic investing in Asian REITs; not only for Asian local investors, but also for property securities fund managers in Australia. Overall, the issue of strategic REITs investment, particularly through the inclusion of emerging Asian REITs has gained increasing importance in current property investment. The significant roles of Asian REITs in a global context have been assessed and evidenced from this research. It clearly fulfils the understandings and insights into the global REIT market, and further provides a contribution to the discipline of the role of REITs in property investment. In the future, given that these emerging Asian REIT market trends will be consolidated, and more potential Asian REITs will emerge (e.g.: China and India), Asian REITs will continue to play a more effective, competitive and significant role in the property investment market globally.

Date of Award	2011
Original language	English