REITs Investments Face New Competition

For the first time in 10 years, Colonial First State Global Asset Management launched a $520 million wholesale property fund that foreign investors were more than happy to sink their teeth into.

This is apparently the latest trend in property investments, a trend that was reflected in the 2012 annual report by PIR, a research house.

According PIR, half of sector assets in both listed and unlisted property trust sector belonged to REITS or the listed proper trusts at $139 billion while wholesale but unlisted funds went up the highest to 29 percent or $82 billion.

Meanwhile, other property funds, including debt and mortgage funds, declined in this sector.

Analysts say that while REITS remain to trade well, investors are now shifting their focus on unlisted wholesale funds as it appears to be more flexible and offers high-single-digit yield.

There are also little constraints in the market for this type of investment, so much that investors can easily raise its equity.

In the last 18 months, REITs has kept focus on buybacks in keeping with their share prices and net tangible assets. This has resulted in the spending of at least $2 billion on buybacks alone, and another $2.5 billion is estimated for spending in the next round of buybacks.

REITS also spent close to $2 billion with acquisitions.

Meanwhile, $16 billion was spent on joint ventures, including direct properties and unlisted local funds, so far.

Some of the most seasoned investors say it’s as if REITs is starting to miss out on the best deals in properties at prime cities.

In the last 12 months, however, REITs continue to trade well and outperform in the stock market.