REAL ESTATE INVESTMENT TRUSTS: MARKET ACCEPTANCE OF REITS IN SINGAPORE

Abstract

In May 1999, the Monetary Authority of Singapore (MAS) released the guidelines for Real Estate Investment Trusts (REITs) in Singapore with the intention of broadening the range of financial products available to local investors, and in 2002, the CapitaMall Trusts became the first REIT to be listed in Singapore. The following year, 2003, witnessed the birth of Ascendas REIT and Fortune REIT. As the instrument is still very new to the investors in Singapore, this paper will investigate the attitudes of two groups of investors: institutional and retail. Two separate surveys will be conducted on each group and interviews will be conducted with brokers. The aim of the research is to find out the level of market acceptance of REITs in Singapore. Previous research has often left out the retail investors, owing to their peripheral role. To fill the void, this paper will attempt to supplement findings on institutional investors with that of retail investors. The findings from the study indicate that most investors are not investing in REITs currently but they may do so if given more time to understand the new vehicle. Despite the time that the US and Australia markets took to reach fruition, the majority surveyed are optimistic that Singapore REIT market will enjoy success in a relatively shorter time-frame. Several brokers also felt that more government sponsorship and larger participation from reputable financial institutions will secure the success of REITs. It seems that it is only a matter of time before the Singapore REIT market takes off.