Overview: Asian real estate securities are up 17.53% YTD in USD, supported by recovering REITs/Developers, positive FX, and falling rates reigniting investor interest. Lower borrowing costs in Asia ex-Japan enable earnings upgrades and accretive acquisitions, while a weak USD, low growth, and falling rates continue to support positioning in the sector.
- Japan: JREITs up 11.9% since January but still trade at a 13% NAV discount. Ongoing asset sales and buybacks continue, while BOJ remains cautious amid US-Japan trade tensions. Fundamentals in Office and Hotels remain strong, and rising construction costs are limiting new supply.
- Australia: The RBA is expected to cut rates later this year, with inflation within target and labour markets softening and part-time jobs declining. We are maintaining overweights in Residential-Diversified, Retail, and Self-Storage. Macro data is expected to drive prices ahead of August earnings.
- Hong Kong: HK real estate stocks rose over 20% in H1 2025, supported by falling rates, recovering retail, residential and tourism activity, and underweight investor positioning. HK Land has led gains on asset sales, buybacks, and dividend enhancement, while large-cap developers remain at wide NAV discounts.
- Singapore: Large-cap SREITs are trading at 2025 highs, supported by falling rates reducing refinancing costs and enabling DPU-accretive deals. The recent NTT Global Data Center REIT IPO was 2.5x oversubscribed with an initial 7.5% yield. New residential cooling measures are unlikely to materially impact the sector.
