REAL ESTATE - With Asia’s booming real estate market showing no sign of cooling off, demand for shares in the latest REIT IPOs looks to be as strong as ever.
At the inaugural Asian Property Leaders Forum, held last week in Shanghai, the call went out for investors’ expectations to be tempered with realism.
The meeting was convened by Aprea, the association formed last year to represent the interests of the listed property sector in Asia.
While they welcomed the interest being shown in real estate investments, the industry’s leaders were concerned that prices are being ramped up to unrealistic levels, in some cases halving the projected yield on these products.
Henderson’s head of property equities, Patrick Sumner, said Aprea has a role to play in educating people about the expectations for REITs in Asia.
“It seems to me there is a difference in expectation here in Asia. Certainly the performance of the Hong Kong REITs suggest there is an expectation that they are going to turn lead into gold."
Singapore-based legal expert Peter Mitchell said: “Sooner or later, as we move out of this growth phase, we will see an increased awareness that this is not the great gravy train investors think it is. In future fund managers will have to work harder for their returns and we will see a consolidation of Asian REITS."
Aprea is looking to appoint a full time CEO by year-end, at which time its current coordinator Lachlan Gyde plans to return to the direct property sector.
The association has 42 members currently, drawn from across the Asia-Pacific but at this stage with a bias towards Singapore and Australia.
First president Alfred Liu of UBS Mitsubishi in Japan recognized that the association is probably under-represented at this point by members from Japan, Hong Kong and China but emphasized that it will be addressing this during the second half of 2006. Aprea is aiming to double its membership by the end of the year.