Cushman & Wakefield and China Real Estate Association Release 2020 Asia REIT Market Report | Taiwan News

Beth McCandry

HONG KONG SAR – Media OutReach – June 15, 2021 – Cushman & Wakefield, a leading global real estate services company, today announced the 2020 Asia REIT Market Report at the 9th China Real Estate Finance Forum in partnership with the China Real Estate Association (CREA.) released ). The report provides an overview of the REITs market for key Asian countries and regions, along with an analysis of mainland China real estate and the real estate securitization market in China. For the first time, the report also includes a special study on the infrastructure REITs markets in the USA, Singapore and India; and offers a detailed case analysis of the Mapletree Logistics Trust – and thus offers a reference for China, which it can fall back on in the further development of a REITs market based on public offers.

REITs in Japan, Singapore, Hong Kong SAR and India are the focus of the Asian market

At the end of 2020, there were 185 REITs in the Asian market with a total market value of $ 281.4 billion, around 5% less than the previous year. Regulators and REITs managers actively responded with a range of measures to address the impact of the COVID-19 pandemic and offered multi-tier support initiatives for REITs to maintain their post-pandemic resilience.

  • There were 62 REITs in Japan with a total market value of around $ 139.4 billion. Although the market value shrank 9% compared to 2019, Japan still accounted for more than half of the Asian REITs market, making it the largest REITs market in Asia and the second largest in the world.
  • The REITs market in Singapore was active in 2020. Due to the regulatory policy, consolidation and merger activities were predominant and transaction liquidity improved. At the end of 2020, there were 42 REITs in Singapore with a total market value of around $ 81.4 billion and a dividend yield of 6.4%. The REITs market in the Hong Kong Special Administrative Region faced challenges and continued to reform in 2020. Share prices fell 11% overall, depressed by both the effects of COVID-19 and an environment of ongoing social unrest. The average dividend yield was 6.3%; the average gearing ratio was 28% below that in Singapore and Japan.
  • In 2020 and early 2021, two office REITs and two infrastructure INVITs, namely IRB and Indigrid, were issued in road and power grids on the Indian REITs market.

The real estate securitization market in mainland China continues to grow rapidly

This report focuses on an analysis of the changes and highlights in REITs, CMBS and CMBN products in mainland China in 2020 and summarizes the disposal of products that expired before the end of 2020:

  • In 2020, 90 products with a total value of RMB 179.86 billion were issued, 8.4% and 13.1% more than last year in terms of number and value.
  • In 2020, two infrastructure REITs were issued, which represent an innovative model for the financing model in the domestic infrastructure industry.
  • 32 products had been successfully completed by the end of 2020. The divestment of the R&F Guangzhou International Airport – Integrated Logistics Park CMBS and the Beijing Huayuan Yingdu commercial REITs attracted a lot of industry attention.

The 2020 Asia REITs Research Report also solidly analyzes the market performance of infrastructure REITs listed in the US, Singapore and India. Chris Yang, Director, Valuation & Advisory Services, Beijing and Leader of Asset Securitization Business Line at Cushman & Wakefield, said: “The 2020 report analyzes infrastructure REITs in detail, including AMT and Corenergy in the US and Hutchison Port Trust in Singapore , and IRB Invit in India, with the aim of examining the development of foreign infrastructure REITs and providing a more useful outlook and forecast for China’s publicly traded REITs. “

Cushman & Wakefield has been involved in over 100 real estate securitization projects

As one of the first professional firms involved in the practice and research of REITs in China, Cushman & Wakefield has actively participated in the development of Chinese real estate securitization. By May 2021, it had completed due diligence and evaluation work on 113 REITs, CMBS and CMBN projects issued with a total value of over RMB 270 billion. Representative projects are Cainiao Network Logistics, the first expandable REIT in China; Poly multifamily, China’s first shelf-offering rental company REIT; Shenzhen Anju Group’s Talent Apartment, the first Talent Apartment REIT in China; and Suning Yunxin, the first REIT to subsequently be issued in China.

Public infrastructure REITs will soon hit the Chinese market

Nine publicly offered infrastructure REITs recently received official registration approval from the China Securities Regulatory Commission and have entered the sales phase. This development was the focus of the discussion among the participants at the China Real Estate Finance Forum. Feng Hu, Senior Director, Head of Valuation & Advisory Services, North China, Cushman & Wakefield, said: “As the nine publicly offered infrastructure REIT pilots entered the sales phase, the long awaited REITs market in China finally pulled the curtain back Cushman & Wakefield was pleased to be involved in the due diligence and evaluation of five of these projects. Underlying assets include logistics warehouses, industrial parks, waste disposal and power generation facilities. Cushman & Wakefield supports the sustainable and healthy growth of the publicly offered infrastructure REITs with its experience and professional services.

REITs market in Hong Kong

In Hong Kong last December, the SFC announced and implemented a revised Code of Real Estate Investment Trusts (REITs) to improve the competitiveness of the city’s REITs market and promote its long-term development while protecting the interests of investors.

The proposed changes include:

(i) allow REITs to invest in real estate (minority owned real estate) under various conditions;

(ii) allow REITs to invest in real estate development projects in excess of the existing 10% Gross Asset Value (GAV) limit, subject to shareholder approval and other conditions;

(iii) increasing the borrowing limit for REITs from 45% to 50% of the GAV;

(iv) Alignment of the requirements for related party transactions and reportable transactions by REITs with those for listed companies in line with existing policies and practices.

The Chief Executive also said in the most recent keynote address that the government will endeavor to promote Hong Kong Real Estate Investment Trusts (REITs) in order to develop Hong Kong into a dynamic REIT market in Asia. LINK REIT (00823) as the largest REIT in Asia in terms of market capitalization has actively grown into a global real estate investment and management institution in recent years through the acquisition of multiple domestic and foreign real estate and property rights. The company has assets in Hong Kong, Beijing, Shanghai, Guangzhou, Shenzhen, London and Sydney. It plans to continuously explore business growth opportunities in various markets.

A number of REITs have recently been launched in the Hong Kong REITs market by well-known companies, including China Merchants Commercial REIT (01503) and SF REIT (02191), which were listed in December 2019 and May 2021, respectively. Other REITs are also reported to be preparing to be listed on the market.

Andrew Chan, Managing Director Valuation and Advisory Services at Cushman & Wakefield, Greater China, commented: “REITs are an important asset class in the capital market. With the implementation of the newly revised Code on Real Estate Investment Trusts (REITs) the changes will allow Hong Kong REITs greater investment flexibility. In conjunction with the listing of China’s infrastructure REITs, we assume that the Hong Kong and China REITs markets will change will develop more positively and comprehensively.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services company delivering exceptional value to real estate users and owners. With around 50,000 employees in over 400 offices and 60 countries, Cushman & Wakefield is one of the largest real estate services companies. In Greater China, 22 branches serve the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and 2020 in the categories Overall, Agency Rental / Sales, Valuation and Research in China. In 2020, the company had sales of $ 7.8 billion in its core services of real estate, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china).

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