Regulatory certainty guides REIT investors

Regulatory certainty guides REIT investorsNew research commissioned by the Asia Pacific Real Estate Association (APREA) shows REIT investors are influenced by regulatory certainty when deciding whether or not to invest in a particular jurisdiction.The research report, the first of its kind to study the regulatory and tax regimes of REITs in the Asia-Pacific region, suggests that the quality of REIT regulation varies from one jurisdiction to the next.It says Australia and Singapore are the most attractive markets for investors in REITs due to their strong regulatory framework, reporting, valuation guidelines and governance regarding related party transactions.REITs are regulated differently in the major regional regimes of Australia, Japan, Singapore and Hong Kong. Each regime differs, for example, in its approach to development, tax, gearing levels and permitted investments. However, the report states that REITs in the region generally provide investors with what they want, with the exception of the option of internal management and an appetite for more development activity than is currently permitted (with the exception of Australia).The report identifies several features of global REITs that investors consider to be important. In some cases these features aren’t present at all in jurisdictions in the Asia-Pacific, or are present only in part.Among those features deemed important are: the need for localised management relevant to a REIT’s country of operations; a strong preference for gearing of per cent or less; no limitation on foreign ownership of REITs; a strong preference for semi-annual or quarterly reporting against benchmarks; a strong preference for semi-annual or annual independent market valuation of assets; and a need for a REIT to be a flow-through entity for tax purposes.According to APREA, the report provides a strong indicator of why some markets in the Asia-Pacific find favour with investors and others don’t. Key among the findings, it says, is the expectation among investors that REITs across the region receive proper tax treatment, as they do in Australia and Singapore.To access the APREA report, visit the APREA site: http://www.aprea.asia