EQUITY REITS IN SINGAPORE : THE INITIAL INVESTMENT ISSUES

Abstract

The Property Market Consultative Committee has proposed the introduction of equity real estate investment trusts (REITs) in Singapore to channel funds into the depressed property market. This study attempts to discuss the initial investment issues facing the proposed investment vehicle and towards this, an investment analysis framework is outlined. The proposed framework consists of interconnecting stages and the study is directed towards the first 3 strategy, analysis and decisions stage at portfolio level. The strategy stage formulates the equity REIT's objectives, philosophy and policies while the analysis stage examines the major factors influencing real estate investments in Singapore and the property market's status quo. Property sectors with better performance and future outlook are recommended in the decisions stage for further detailed consideration in the later stages of the investment framework. The study concludes that an equity REIT in Singapore can draw experiences from the diversified investment patterns of REITs overseas. However its basic investment objectives have to be examined systematically against the investment environment in Singapore.