Singapore and Hong Kong REITs

Date: 12 Mar 2016

This is in response to a question on Singapore and Hong Kong REITs

We have touched on 3 Singapore REITs previously on the following sessions:

Session 2 CapitaRetail China Trust

Session 5 Croesus Retail Trust, Religare Health Trust

Singapore is still the ideal place for REIT investment as it has more then 40 REITs listed on the exchange.

As for Hong Kong REITs, I have not initiated any discussion due to the following reasons:

1) Hong Kong’s economic well being is closely related to China. China slowdown is affecting Hong Kong stocks, and that include REITs. Most of the Hong Kong listed REITs have operations in China.

Although properties in major China cities have risen in value, there is still a risk of an asset bubble in China. Therefore it is more prudent to avoid the property sector in China at this juncture and that include REITs. We will likely discuss Hong Kong REITs when the dust settles which will result in a cheaper entry price.

2) Hong Kong listed REITs with operations in China are often a single company and not part of a much bigger conglomerate such as Capitaland acting as a main sponsor for CapitaRetail China Trust.

3) Hong Kong property sales have fallen 70%, This does not augur well for the REITs there.

4) There are two REITs with operations in Hong Kong; ie: Link REIT and Regal REIT. However in view of the general slowdown in Hong Kong’s economy both could likely see their earnings being impacted. Link REIT has a high entry price with low yields. Regal REIT which is essentially a Hotel REIT has seen its revenue impacted by lower tourist arrivals.

I will include Singapore REITs in session 15.