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J-REITs lead as trusts up their share of Asian property deals

Asian real estate investment trusts have doubled their share of property deals in the region since the global financial crisis, CBRE research claims.

REITs contribution to total Asian property investment turnover rose to 22% in the first half of 2012, from 11% in 2009, according to CBRE’s latest Asia REIT View point report.

Total investment turnover for Asian REITs reached $7bn in the first half of this year, down 14% on the second half of 2011.

Japanese and Singaporean REITs were the most active buyers, accounting for 53% and 33% respectively of acquisitions by Asian REITs since 2009.

J-REITs have been buying aggressively this year, shored up by the Bank of Japan’s Asset Purchase Program, which was extended by a further ¥ 10bn ($127.6m) in April.

Offices remain the preferred asset for investment, but most REITs preparing to float are focused on other sectors that will benefit most from growth in Asian domestic consumption, such as hospitality and retail.

J-REITs have been allowed to buy overseas assets since 2009, but have not tended to do so, in contrast to Singapore REITs. This is due to the ambiguous valuation requirements for overseas properties, argues CBRE.

The Japanese government is looking at ways to encourage J-REITs to invest offshore via special-purpose vehicles.

There are 137 Asian REITs, with a total market capitalization of $107bn and a 5.8% average dividend yield, CBRE said.

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