REAL ESTATE INVESTMENT TRUSTS IN SINGAPORE - AN INVESTIGATION OF THE INVESTMENT CLIMATE

Abstract

In September 1985, the Minister for Finance set up a Property Market Consultative Committee (P.M.C.C.) to prepare an 'Action Plan' for the property sector. Among the many recommended solutions mentioned in the report was the proposal for the establishment of Real Estate Investment Trist (REIT) in Singapore. A REIT is a financial vehicle that allows investors to pool funds for participation in real estate ownership or financing. This study seeks to examine the proposal for the establ i shment of REIT in Singapore and investigate the attitudes of both local real estate professionals and potential investors to such a form of investment vehicle. Overseas experiences with REITs is examined to enable a better understanding of the investment vehicle and its application to the local context under the prevailing market conditions. The survey of local real estate professionals provides an insight into the investment climate while the results of the potential investors survey gives an insight into their investment behaviour. In the course of the study, it was found that potential investors are generally keen on the principles of REITs. Acceptance would be subject to a number of qualifications and constraints which if accommodated would make the investment attractive in the eyes of investors.