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Asia Pacific REITs: Hong Kong Up 7.8% Led By LINK REIT, Japan Falls 1.9%

Asia Pacific REITs: Hong Kong Up 7.8% Led By LINK REIT, Japan Falls 1.9%

Link REIT climbed on European acquisition speculation

By Patrick Ma, Director, Listed Products and Research, Admiral Investments

Asia Pacific’s top 100 most traded REITs gained 0.6% in June but underperformed equities, which climbed 5.2%. Japan REITs were the worst performers with an overall 1.9% decline, while Hong Kong led the region, rising 7.8% after May’s fall.

Hong Kong’s gains were led by Champion REIT and Link REIT, which climbed 14.8% and 11.7% respectively in local currency terms. The Hong Kong market appeared to have discounted the initial news of the proposed legislation of National Security Law for Hong Kong by China’s government, which was positive for asset prices in Hong Kong.

Separately, Link REIT is said to be in negotiations to buy Morgan Stanley’s European headquarters in London in what would be the trust’s first acquisition in Europe.

Among J-REITs, Invesco Office J-REIT was one of the poorest performing REITs. It fell by 10.8% in June. Vicinity Centres too had a bad month, falling 11.18%.

AsiaPac REITs rose on the gradual relaxations of lockdowns as well as indications that the COVID-19 pandemic is seeing signs of stabilising. Some economies have also re-opened their borders with the creation of “travelling bubbles” between countries. However, AsiaPac REITs’ performance still lagged those of equities as markets’ appetite for risk rose. As we look forward, we expect Asia Pacific REITs to benefit from the gradually re-opening of the region’s economies. 

Globally, the MSCI World Index had risen 2.7% for the month, following a 4.9% rise in May. Global REITs climbed 2.8% in June. For the first half of 2020, global REITs dropped 21.3% and underperformed global equities that fell only 5.5%. 

Below is a table showing the respective country performance based on the GPR Aprea Investable REIT 100 Index. For performances based on the broader market GPR APREA Composite REIT Index, please click here.

REIT Index Performance Corresponding equity index Performance

Jun 2020 YTD-2020
Jun 2020 YTD-2020
GPR 250 REIT Index  2.8% -21.3% MSCI WORLD 2.7% -5.5%
GPR Aprea Investable REIT 100 Index 0.6% -19.2% MSCI AC ASIA PACIFIC 5.2% -6.3%
GPR Aprea Investable REIT Australia 2.9% -23.1% MSCI Australia 7.0% -13.9%
GPR Aprea Investable REIT Japan -1.9% -20.2% MSCI Japan 0.0% -6.9%
GPR Aprea Investable REIT Singapore 0.8% -11.7% MSCI Singapore 4.4% -21.3%
GPR Aprea Composite REIT Index Hong Kong 7.8% -21.2% MSCI Hong Kong 11.0% -9.7%
Based on the market close on June 30, 2020

All performance numbers are based on total gross returns in USD

Sources: GPR and Bloomberg