Asia’s business community is never slow to spot a trend and real estate investment trusts are certainly hot news. A trickle from the pipeline of early Reit offerings in Singapore and latterly Hong Kong earlier in 2005 threatens to become a torrent of new issues in 2006 as the region’s property developers and investment banks line up to launch new vehicles for Asia’s yield-voracious investors.
In November, after a shaky start, Link Reit, the Hong Kong government’s agglomeration of retail malls and car parks, was greeted with euphoria by Hong Kong’s IPO-mad public. The $2.54 billion IPO was heavily oversubscribed, attracting total orders of $47 billion, including $14.5 billion from the public. The share price has jumped some 40% since trading began, although that has been helped significantly by the revelation that a US hedge fund has built a sizeable stake [see Hong Kong story].
Quickest out of the blocks after the Link Reit stalking horse was Li Ka-Shing with the $246 million IPO of Prosperity Reit, a spin-off of various property interests from flagship developer Cheung Kong Holdings. A potent combination of the latest hot investment craze, an offering from Hong Kong’s very own Mr Midas sprinkled perhaps with some additional seasonal euphoria was too much for Hong Kong’s money-mad public.