GPR/APREA Index

Overview

Global capital markets rallied at the beginning of the year, riding on expectations of a global economic recovery; investors also cheered the swearing-in of US President Joe Biden and the implications of anticipated policy reversals that could arise from the new administration. However, financial markets faltered towards the end of January, ending with a mixed performance as new coronavirus variants and delays to vaccinations prompted caution. Real estate stocks in the region failed to hold on to the rally that started in November last year. However, Japan and Singapore-listed counters managed to buck the overall trend.

Listed Real Estate

The GPR/APREA Listed Real Estate Composite fell at the start of the new year, underperforming both the region’s equity and REIT markets. The declines were seen across the region’s bourses with those in the emerging markets hit particularly hard. Rising infection caseloads threw recovery prospects in doubt as stocks across the major markets in emerging Southeast Asia came under pressure with governments reverting to stricter measures. In Hong Kong, authorities also imposed the city’s first lockdown to battle another wave of infection. Meanwhile, investors became wary after monetary officials in China unexpectedly slowed liquidity injections, signaling a tightening bias as the country’s recovery from the pandemic gains firmer footing.

REITs

Asia Pacific REITs declined in the opening month of 2021 with a marginal 0.3% loss, dragged lower by Australian REITs which fell 4% in January. However, those in Japan and Singapore bucked the regional trend to post increases on the strength of its office and industrial listings. Office S-REITs reportedly remains well poised to capture regional expansion by Chinese tech giants with the likes of Lazada and its parent company, Alibaba, as well as ByteDance, which owns TikTok, expanding its office footprint on the island.

Brookfield India Real Estate Trust, backed by Canadian asset manager Brookfield Asset Management Inc., is seeking to raise as much as US$522 million in an Indian IPO, which is slated for a February debut. Brookfield’s REIT is the third REIT launched in under two year, as acceptance of the investment product gain momentum in the country. India has been seeking to attract more REIT IPOs in recent years by tweaking rules to make the vehicle more attractive for investors and developers.

Blackstone is also believed to be floating its logistics portfolio on the Australian stock exchange, according to newspaper articles. With a 45-asset portfolio across major Australian cities, the newly created Milestone Logistics is expected to raise more than A$1 billion if the IPO is pursued.

Outlook

Asia Pacific REITs could be set for a broader recovery this year, with the continued global economic recovery and low-interest-rate environment a positive for the asset class. However, the pace will remain uneven across sectors. Riding on long-term structural trends, Industrial REITs have emerged as safe-haven assets in a pandemic-ravaged year. This is likely to persist as the increasing prevalence of mutated COVID-19 virus strains could refuel demand in the sector, which we note has outperformed at the height of the pandemic. The fortunes of Office REITs will be bifurcated along with geographies, with those with exposure to the region’s tech hubs likely to outperform. While recovery in the Hospitality and Retail is likely to be more nuanced, vaccine optimism has fueled confidence and likely beneficiaries from a rotation to cyclical stocks. The uncertain course of the pandemic and the trajectory of the global economic recovery, in the meantime,  will likely induce more volatility in the short term and remain a huge sentiment driver. However, with continued progress in the development and more visibility on the horizon in the deployment of vaccines, there are reasons to believe that risks in 2021 are weighted on the upside.

Overview

Conducive global developments placed financial markets on a risk-on mode in the final month of 2020. The prospect of widely available coronavirus vaccines, the US bipartisan agreement on fiscal stimulus, and the EU-UK post-Brexit trade agreement’s conclusion provided the necessary fillip to sentiment, sustaining momentum for real estate stocks to conclude on a positive note. However, for the whole of 2020, real estate stocks continued to lag the wider equity markets, which have been supported by tech and pharma counters. Property cycles will eventually chart its own way out of the crisis, which although historically lags an economic recovery, will be longer-lived, sustained by the region’s enduring structural fundamentals.

Overview

Conducive global developments placed financial markets on a risk-on mode in the final month of 2020. The prospect of widely available coronavirus vaccines, the US bipartisan agreement on fiscal stimulus, and the EU-UK post-Brexit trade agreement’s conclusion provided the necessary fillip to sentiment, sustaining momentum for real estate stocks to conclude on a positive note. However, for the whole of 2020, real estate stocks continued to lag the wider equity markets, which have been supported by tech and pharma counters. Property cycles will eventually chart its own way out of the crisis, which although historically lags an economic recovery, will be longer-lived, sustained by the region’s enduring structural fundamentals.

Listed Real Estate

The GPR/APREA Listed Real Estate Composite returned 1.6% in December, underperforming both the region’s equity and REIT markets, as the tepid performances in China and Hong Kong weighed on the sector. Among the region’s heavyweights, property stocks in China and Hong Kong posted the largest declines on an annual basis as policy risks amplified the drag on valuations. In addition to the so-called “three red line” limits on developers, Mainland regulators made further moves to cap bank loans to the property sector, including curbs on mortgage lending, which will inadvertently subdue home purchases.

REITs

In contrast, Asia Pacific REITs, as tracked by the GPR/APREA Composite REIT Index, advanced over 5% in December with broad-based gains. Still, this could not lift Asia Pacific REITs into growth territory for 2020.

Notably, rotation towards higher risk segments propelled Retail to rise by 6.5% in December. On an annual basis, Hotel REITs suffered the biggest contraction, shedding 21.1% for the whole of 2020. This is in contrast with Industrial’s strong performance, which chalked up over 20% in gains in the same period as investors sought safety in logistics and digital assets.

Gains in December were broadly positive across countries, with Thailand an exception, as a resurgence in infections depressed sentiment. Despite experiencing a similar surge in cases, J-REITs still managed to carve out gains. The government has announced fresh stimulus measures amounting to JPY73.6 trillion in December, signaling a resolve to pull the country out of its coronavirus crisis-induced slump. This follows the over JPY200 trillion budgeted from two previous packages.

Meanwhile, South Korea is emerging to be a growth catalyst for REITs in the region. ESR Cayman Limited announced the successful stock exchange listing of ESR Kendall Square REIT on the KOSPI on 23 December 2020, marking the first publicly listed institutional quality logistics asset focused REIT in South Korea.

Following the latest quarterly rebalancing of the GPR/APREA index series, 11 REITs were added, including debutants on the Indian and the Philippine bourse. Representation in the Industrial sector also expanded.

Outlook

Monetary policies are expected to remain accommodative to prop up economic activity weakened by the pandemic. This has historically fueled REIT valuations. As the world continues it vaccine rollout, more upside potential in the region’s retail and office sectors is expected, along with the prospects for the re-opening of borders. However, the emergence of mutated strains, which adds a new dynamic to the uncertainty, is likely to rein in expectations. This will continue to fuel gains in the “anti-pandemic” Industrial REITs, which have served as portfolio hedges.

Regional property stocks reversed two consecutive months of falls in November as successful trials of vaccines in development raised hopes for an end to the pandemic. As a Joe-Biden victory bred expectations of a more stable geopolitical environment, the world’s largest trade pact was also inked in November. Fifteen Asia-Pacific economies including those in the ASEAN bloc, Australia, China, Japan, South Korea and New Zealand committed to the Regional Comprehensive Economic Partnership, underscoring the significant role the accord could play in post-pandemic recovery efforts.

Regional property stocks reversed two consecutive months of falls in November as successful trials of vaccines in development raised hopes for an end to the pandemic. As a Joe-Biden victory bred expectations of a more stable geopolitical environment, the world’s largest trade pact was also inked in November. Fifteen Asia-Pacific economies including those in the ASEAN bloc, Australia, China, Japan, South Korea and New Zealand committed to the Regional Comprehensive Economic Partnership, underscoring the significant role the accord could play in post-pandemic recovery efforts.

 Listed Real Estate

The GPR/APREA Listed Real Estate Composite returned 11.4%, outperforming the region’s equities market. Property stocks across most of the region, particularly those in emerging Southeast Asia, rose. Thailand shrugged off continued civil unrest to post the region’s largest returns; those in Australia gained on easing lockdowns in the state of Victoria. Hong Kong and China also rode higher on upbeat data signaling continued recovery in the world’s second-largest economy, with consumer spending picking up steadily and industrial output rising faster than expected in October. The country’s central bank had in November pumped more liquidity into the financial system to maintain momentum.

REITs

Asia Pacific REITs, as tracked by the GPR/APREA Composite REIT Index, closed 9.7% higher. Similarly, the rebound was led by the sectors that had been hit the hardest by the pandemic.

Retail REITs clocked the highest gains, followed by those in Hospitality as both sectors are likely to benefit the most from the rollout of a vaccine. Office REITs also rose on the back of a rotation to economically sensitive stocks. Industrial REITs were notably left out of the rally.

Across much of the region’s bourses, REIT stocks posted double-digit gains. Thailand’s component stocks led the way, with its Retail and Hospitality REITs rebounding on a surge of optimism as the kingdom reopened its borders to all tourists through a 60-day travel visa. Easing lockdowns also lifted Retail REITs in Australia.

Outlook

Sustained recovery beyond the Industrial sector remains a prerequisite for a revival to pre-pandemic highs. While Retail and Hospitality will continue to retrace their pre-pandemic highs, the path is likely to remain uneven without clarity on a full return to normalcy. As euphoria over the progress of vaccine trials is gradually priced in, further direction will, in the interim, be focused on shorter term dynamics as investors remain skittish over the near-term outlook. Still, we expect the wave of vaccine-related optimism to remain sustained into December. The broadening recovery into riskier assets so far is signaling investors’ belief that if anything, the outlook is at least brighter. A stimulus deal in the US, currently stymied by political wrangling, and better-than-expected third quarter GDP growth figures in the region are sentiment drivers and could still shore up markets.

在经历了暗淡的9月之后，全球资本市场又迎来了疲软的10月。由于美国大选的不确定性、漫长的财政刺激政策谈判、加上欧洲疫情反弹，市场悲观情绪持续蔓延。

10月份，亚太地区GPR/APREA上市房地产综合指数呈负收益，其表现差于亚太股票指数。亚太股票市场之所以表现较好是得益于其包含了高权重的科技公司，亚太债券的良好表现也受益于此

在经历了暗淡的9月之后，全球资本市场又迎来了疲软的10月。由于美国大选的不确定性、漫长的财政刺激政策谈判、加上欧洲疫情反弹，市场悲观情绪持续蔓延。

10月份，亚太地区GPR/APREA上市房地产综合指数呈负收益，其表现差于亚太股票指数。亚太股票市场之所以表现较好是得益于其包含了高权重的科技公司，亚太债券的良好表现也受益于此

与亚太上市房地产股票相似，10月份亚太REITs总收益也出现收缩，除了中国台湾地区以及那些具有中国大陆资产的REITs表现较好，其他市场都表现低迷。从REITs资产类别来看，其指数表现也呈负值，其中零售业REITs受到冲击最大，工业REITs则下跌幅度最小。

虽然GPR/APREA上市房地产和REITs指数在10月份经历了第二次的下滑，但种种迹象表明，市场将于第四季度好转。亚太股市对拜登当选总统做出了积极反应，同时，一系列进展顺利的疫苗研发也鼓舞了市场信心。亚太房地产市场依然有可能平稳地度过这一年。

Capital markets in the region experienced another weak month in October, following a lackluster September. Uncertainties from the US presidential election, protracted US fiscal stimulus talks and a resurgence in infection numbers in Europe contributed to the bearish sentiment.

Closer to home, Thailand’s stocks fell on mounting anti-government protests, which, if protracted is likely to derail an economic recovery – its key equities benchmark tumbled to its lowest level in more than six months. The  GPR/APREA total return gauges for both the Kingdom’s listed real estate and REITs contracted by double digits to clock the biggest fall among regional markets.

Capital markets in the region experienced another weak month in October, following a lackluster September. Uncertainties from the US presidential election, protracted US fiscal stimulus talks and a resurgence in infection numbers in Europe contributed to the bearish sentiment.

Closer to home, Thailand’s stocks fell on mounting anti-government protests, which, if protracted is likely to derail an economic recovery – its key equities benchmark tumbled to its lowest level in more than six months. The  GPR/APREA total return gauges for both the Kingdom’s listed real estate and REITs contracted by double digits to clock the biggest fall among regional markets.

Listed Real Estate

The GPR/APREA Listed Real Estate Composite Index posted negative returns in October, underperforming the region’s equities market, which were supported by stocks in the heavily-weighted tech sector, as well as bonds. China’s property stocks, a regional heavyweight, contracted as property firms continued to face mounting pressure to meet the government’s new debt-ratio caps. Stocks in Indonesia, however, bucked the regional trend to clock the largest gains on optimism that labor market reforms could bolster growth. Sentiment in the Philippines also revived from slowing infection cases.

REITs

Total returns for Asia Pacific REITs similarly contracted in October. Taiwan and China-linked REITs were the only markets that stayed in positive territory. Sector indices were negative across the board with retail the hardest-hit while industrial REITs contracted the least.

During the month, CapitaLand Commercial Trust  and CapitaLand Mall Trust merger was finalized to form a new entity – CapitaLand Integrated Commercial Trust.

REITs in Singapore have picked up the pace in acquisitions, spurred on by low interest rates, higher debt capacity under revised gearing limits allowed by the central bank to emerge strongly from the lockdown-induced slowdown in the first half of the year. Market reports indicate that S-REITs have announced S$7.3 billion in acquisitions, compared to about S$1.4 billion in the first half of the year. This could put acquisitions activity at pre-pandemic levels, as REITs remain focused on long term potential, taking advantage of any pricing dislocations to seal attractive entry opportunities.

The region’s REIT markets continued to see an uptick in activity, with significant fundraising activities undertaken. ASX-listed Home Consortium Limited is seeking A$300 million for the proposed IPO of its spin-off, Home Co Daily Needs REIT. Logistics giant ESR also announced plans to debut a Korean REIT in December, targeting a ₩375.3 billion equity sale comprising a logistics portfolio in the country’s largest cities of Seoul and Busan.

Outlook

While both the GPR/APREA Listed Real Estate and REIT indices shrank for the second consecutive month in October, signs are pointing to an inflexion in the fourth quarter. Regional stock markets have reacted positively to a Biden victory while encouraging results from a number of vaccines under development boosted sentiment. The region’s property markets could yet finish the year on a strong footing.

• 美国即将进行总统大选，全球经济复苏仍存在许多不定因素，而投资者多出于风险规避心理，九月地区内地产股票出现下滑。
• 九月GPR/APREA综合房地产投资信托指数下挫1.4%，终止了自四月以来的涨势，表现逊于大盘，后者下跌1.1%。
• 在低利率，高负债能力的支持下，地区房产信托雄心勃勃，逐渐恢复停滞的交易。根据房地产资本分析公司Real Capital Analytics数据显示，就收购体量而言，第二季度体量为2010年以来的历史最低值，而第三季度地区房产信托收购总额超41亿美元。

The region’s property stocks lost ground in September as risk aversion gripped investors. ahead of a US Presidential election and continued concerns that a global economic recovery remains volatile.

The GPR/APREA Composite REIT Index lost 1.4% in September, snapping a string of monthly gains since April, underperforming the wider market which declined by a smaller 1.1%.

Supported by low interest rates and higher debt capacity, the region’s REITs are turning acquisitive and resuming stalled deals. According to Real Capital Analytics, the region’s REITs expended over US$4.1 billion in acquisitions in the third quarter, after posting a record low quarterly volume in the second quarter since 2010.