Saturday, July 14, 2012

More REIT acquisitions over next 12 months: experts By Lynda Hong | Posted: 12 July 2012 2313 hrs

SINGAPORE: The property market may see some high-brow deals transacted over the next 12 months. Deep-pocketed institutional buyers like the real estate investment trusts (REITs) are expected to see more value in Singapore's property. More REIT listings are also likely to spur acquisitions in Singapore.

The proposed listing of Ascendas Hospitality Trust is set to be Singapore's largest initial public offering (IPO) this year. The REIT is expected to raise between S$770 million and S$823 million by issuing between 506 million and 530 million stapled securities.

Ascendas Hospitality Trust will have an initial portfolio of 11 hotels located in major cities of Australia, China, Japan and South Korea.

Experts said more of such REIT IPOs are expected in Singapore soon.

With the revenue per available room forecast set to grow due to a supply shortage of between 1,200 and 1,500 rooms in Singapore, hospitality REITs with Singapore assets will be attractive to investors, but owners will be reluctant to sell hotels.

John Stinson, MD of Capital Markets (Asia Pac) at Cushman & Wakefield, said: "They will be successful as long as they can actually acquire several anchor singapore properties. The market is locally driven that way but has to see their concentration of asset base in the local properties.

"It's a good time for REITs to be acquiring properties. In the next 12 months, you will see REITs acquiring properties. And as they grow in size, there will be more properties."

At its Property Prospects Seminar on Thursday, the Real Estate Development Association of Singapore (REDAS) noted that industrial units have made record transactions recently, while Singapore's retail property sector also performed strongly.

REDAS said the Additional Buyers Stamp Duty (ABSD) has brought about new developing trends in the non-residential property market. While REDAS has seen declining commercial office rents, experts said they now find commercial office REITs attractive.

Craig Ward, Senior Director of Regional Capital Markets with Savills Singapore, said: "Effectively, you have stable income in triple grade A assets. For the most part, I felt that the longer term leases will hold out over the difficulty in the current rental climate. My general perception is rental will come down in the short-term, but it is a cyclical process, and they will rebound quite considerably."

The FTSE ST REIT Index, which measures the overall REIT market in Singapore, has gained some 6.52 per cent for the past month.

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