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Asia Pacific REITs Outperformed Equities in June, With Japan Taking The Lead

For the first half of 2021, Asia Pacific REITs rose 9.4%, better than Asia Pacific equities’ 5.1% increase

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

July 5, 2021- Asia Pacific top-100 most invested REITs rose 2.1% in June, led by robust performance by Japanese REITs. Meanwhile, the region’s equity market fell 0.3% on concerns about possible US monetary policy outlook changes and a strengthening USD. Global REITs climbed 1.6% during the month.

For the first half of 2021, Asia Pacific REITs rose 9.4%, better than Asia Pacific equities’ 5.1% increase. Global REITs were up 18.7%, outperforming global equities’ 13.3% increase. Among Asia Pacific REITs, Japan and Hong Kong REITs gained more than 14% and outperformed their respective equity markets. A weakened Japanese yen during the period spurred investments into real estate assets and REITs in Japan. Separately, the prospects of an eventual re-opening of its economy and borders had supported the performance of Hong Kong REITs.

For June, the global capital markets remained fixated on rising inflationary pressures and whether central banks will start to reverse current loose monetary policies. Global markets dived mid-June when the US Fed indicated possible quantitative tightening and a potential interest rate hike by 2023. However, stocks soon rebounded from lows, with global equities up 1.5% for June and the US equity market gaining 2.8%. Going forward, we expect inflationary pressure to intensify. We also expect most central banks worldwide to maintain loose monetary policies given the uncertain economic outlook in a post-pandemic world. Whilst new variants of coronavirus spread, the continuing rise of coronavirus vaccination rates, especially in developed countries, points to prospects of economies re-opening. We have also noticed a return of institutional interests in commercial real estate across the region, which have led to cap rate compressions, especially in markets such as Australia. Thus we remain positive about the Asia Pacific region’s REIT market.

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