Real Estate Investment Trusts (REITs) in the Asia Pacific region have raised a record amount of capital this year, as investors sought more defensive, yield-based stocks amid growing global economic and political uncertainty.
REITs in Asia Pacific have raised over US$14 billion so far in 2019, surpassing the previous record of US$13.8 billion in 2013, according to JLL data.
“This has been a particularly impressive year for REITs. Most major REITs are now trading at a premium to their underlying valuation, which has improved their ability to raise follow-on equity.”
JLL’s Nicholas Wilson, Head of Asia Pacific Capital Markets
Demand from institutional investors has also provided for a fertile environment for launching new REITs on public exchanges. Capital targeting the direct market remains plentiful, resulting in a highly competitive marketplace.
Initial public offerings (IPOs) that are seeded with well-managed core assets largely have been successful in attracting investors.
Sectors in the spotlight
REITs in the logistics sector have pulled in around a third of all capital raised, even though their current share of the REIT market capitalization stands at just 12 percent. This is because warehouses have become increasingly important over the last decade amid the rise of e-commerce, which requires speedy delivery of goods from a wide network of facilities.
A rapidly growing population and strong economic growth in the region have also given it a boost.
“The logistics sector remains the most in-demand asset class around the Asia Pacific region,” Wilson says.
“However, the level of transaction volumes is falling well short of demand. The supply of international grade-A logistics stock is also below requirement in most markets, so…
