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Tuesday, April 8, 2008

Time to join global bandwagon

Now, there's a body to encourage greater investments in Asia Pacific real estate

Owners and developers looking to be part of a community that is working towards putting the region’s real estate on the global investment radar could consider membership in the Asian Public Real Estate Association (Aprea).

This private NGO is shaping up to represent Asia Pacific’s publicly traded real estate sector, and has 125 members to date. Among them, listed property companies, property trusts, investment banks, property securities fund managers, real estate consultants, corporate advisers, service providers, investment researchers and even teaching institutions.

Formed in June 2005, Aprea’s founding members include ARA Trust Management, Ascendas-MGM Funds Management, Westfield Group, Macquarie Bank and Hongkong Land.

According to Aprea, its aim is to “unite the currently fragmented Asia Pacific publicly listed real estate sector” and encourage greater investment by delivering a clear message from the industry to investors and the media.

It is also keen on ensuring appropriate representation in global indices, improving the operating environment for members via tax efficiency and enhanced regulatory frameworks and unifying the industry through an integrated platform.

These ambitions seem to dovetail with the effort by many Malaysian entities to market their properties abroad, and with the government’s objective of branding the country an International Property Destination.

Views that Asia is a riskier investment prospect compared to Europe or the United States are also being addressed by Aprea.

The body said this will come by encouraging members to adopt international best practice standards and the development of a robust reporting and corporate governance structure

With the removal of impediments and negative impressions, Aprea said capital inflows will be faster and more efficient.

Following its setting up of offices in Hong Kong/Macau and Japan, it recently opened its Singapore chapter.

Aprea chief executive officer Peter Mitchell said the island republic’s listed real estate market is one of the world’s fastest growing and the new chapter is the result of its increasing attractiveness to the global investment community.

Singapore has the second largest Real Estate Investment Trust (REIT) market in the region with a capitalisation of US$21.6 billion (US$1=RM3.20) – US$24.4 billion less than first-place Japan.

In third place is Hong Kong with US$8.5 billion, followed by Taiwan (US$1.7 billion) and Malaysia (US$1.6 billion).

Despite the United States’ subprime mortgage crisis and global credit crunch, Mitchell said “2008 will present a period of good opportunities for companies that are well capitalised and don’t rely on credit”.

Describing the REIT markets in Japan, Hong Kong and Singapore as mature, he said the general slowdown in the global economy could see a return to fundamentals.

“We have seen the end of financial engineering,” he said, adding that large institutional investors such as US pension funds are now allocating sizeable budgets to Asian real estate.

Last year, the California Public Employees’ Retirement Scheme (CalPERS) and California State Teachers’ Retirement Scheme (CalSTERS) increased their exposure to Asian real estate by six to eight per cent, with CalPERS investing US$1 billion.

Australian funds, too, such as National Australia Bank’s structured property finance business, nabCapital, plans to make more inroads into the region following demands by its clients for the company to “take a more active role in sourcing opportunities in Asian real estate”.

Hong Kong’s and Singapore’s REITs, Mitchell said, are beginning to mature as an asset class and “unlike the US economy, Asian economies are expected to rise” which would further drive their REITs.

To accelerate the pace, he said Aprea is seeking to introduce “international best practice standards (as well as) sponsor and publish research and analyses”.

By New Straits Times (by Zoe Phoon)

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