Boon Chye Loh, CEO, Singapore Exchange Ltd
Asian investors are putting more capital into real estate and Europe is an increasingly attractive destination for diversification and currency reasons, Boon Chye Loh, CEO, Singapore Exchange, told Real Estate Day.
The investments are across countries and sectors.
‘Asian investors are looking for scalability, they want large markets, so the UK and Germany are clearly in the top 5 globally in terms of real estate markets for scale and size,’ Loh said. ‘But investors are looking to diversify across different countries in Europe, so they also go to markets like France, Netherlands, the Nordics and even some of the central Eastern European countries’.
The investments are across sectors as well as countries, he said. The 144 Singapore-listed REITS that have European assets span a very broad mix of real estate sectors, from offices to data centres and from logistics and industrial to hospitality.
Real estate as an asset class is very familiar to Asian investors, Loh said: ‘At the Singapore Exchange property is one of the core sectors, accounting for about €180 bln, or 10% of total market capitalisation. Also Real Estate Investment Trusts (REITs) have an 18-year history of development now, with a broad base of investors, not just institutional but also retail, family offices and wealth management’.
Until recently investors on the Singapore Exchange tended to put their capital in Asian real estate, including Singapore, but since 2014 all the REITs listed have overseas assets. ‘Infact nine of our REITs have European assets, close to 144 properties,’ he said. ‘Investors are familiar with all European countries, including the UK which they know well, but generally they opt for portfolios across Europe’.
The Exchange has responded to investors’ demand for an international approach which goes both ways.
‘We are seeing European as well as US sponsors increasingly looking towards SGX as a venue for listing to tap a wider pool of investors,’ he said. ‘Also for investors who are deploying capital in Europe and the US it’s an opportunity to invest in the currency itself, be it the euro or dollar’.
There are several advantages to a listing in Singapore, Loh said: ‘The individual local and foreign investors would receive their dividends tax free, so tax transparency is guaranteed. Even for institutional investors the rate is only 10%, lower than most other jurisdictions’.
Over the years sponsors have generally been able to unlock value by listing as a trust on the Singapore Exchange and all the property values will come very close to NAV and at times will be slightly above NAV, he said.
An increasing number of investors in Singapore and in Asia in general are looking to access real estate, particularly overseas, via a listed route.
‘I do see that trend of Asian investors coming across through the Singapore Exchange and increasingly looking towards REITs with overseas properties,’ Loh said. ‘The reasons are the outlook of continuing low interest rates and then the reliable legal environment together with Transparency, which are are always good ingredients when it comes to investors looking to deploy capital’.
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