Real estate investment trusts (Reits) are gaining mass acceptance in Asia. After strong institutional and retail demand among Asian offerings, mainly from Singapore and Hong Kong, other Asian countries are learning the benefits of these property investment vehicles.
Most recent are Thailand and Malaysia. In August DBS and Thai Military Bank launched the Bt7.3 billion ($178 million) CPN Retail Growth Property Fund. Managed by local mall developer Central Pattana, the Reit operates two Bangkok malls and is Thailand's largest to date. It is also the first to be offered to international investors, which snapped up the units and generated demand nearly five times the size of the offering.
In Malaysia, local bank Aseambankers Malaysia brought Axis-Reit to the local stock market to raise M$123 million (US$32 million) of new capital. Despite the lack of tax incentives for investors, the retail offering was 3.7 times subscribed and the institutional offering 18.4 times subscribed. Reits for Malaysian property developers Guoco Land and Landmarks Berhad are said to be following soon.
Also rumoured to be back on track is the Hong Kong government's Link Reit. Causing huge embarrassment to the government after the entire US$2.7 billion IPO was scuppered in December 2004 by the legal actions of a single disgruntled pensioner, the legal wrinkles have now been ironed out and the IPO is set to launch later this year.