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Japan, S’pore Outperform on Office, Industrial REITs

Japan, S’pore Outperform on Office, Industrial REITs

Overall, Asia Pacific REIT dropped 0.3% in January as Australia and Hong Kong markets fell.

By Patrick Ma, Director, Listed Products and Research, Admiral Investment Limited

February 2, 2021- Global capital markets rallied at the beginning of the year, riding on expectations of a global economic recovery and a more market-friendly Biden-led US administration. 

Despite the strong 2021 start, financial markets faltered towards the end of January and ended the month with mixed performance due to concerns about a resurgence in coronavirus cases and delays to vaccinations.

Global equities ended the month down 1% while REITs were flat. Global capital markets had been marked by increased volatility and fund flows towards equities, most recently illustrated by the “short-squeeze” of GameStop in the US. 

In January, US REITs were little changed but outperformed equities. UK REITs dropped 1.7% and underperformed UK equities as the country grappled with a new wave of coronavirus pandemic outbreak and lockdowns.

China attracted fund flows

On the other hand, Asia-Pacific REITs fell 0.3% and underperformed the region’s equities, which were up 1% in the period. China-related shares, which attracted fund flows, helped to support Asia Pacific equities. Meanwhile, the region’s REIT market was dragged lower by Australian REITs, which fell 4% in January. 

In contrast, Japan and Singapore REITs rose 2.4% and 1.3%, respectively, outperforming each country’s equity market. The outperformance of Japan and Singapore REITs can be attributed to office and industrial REITs’ strong performance in both countries. 

As we look forward, we expect that the continued global economic recovery amid a low-interest-rate environment will be positive for Asia Pacific REITs. Further support will become more evident when the recent round of outbreaks is brought under control, and the outlook for vaccine availability becomes clearer.

REIT IndexPerformanceCorresponding equity indexPerformance

Jan 2021YTD-2021
Jan 2021YTD-2021
GPR 250 REIT Index 0.0%0.0%MSCI WORLD-1.0%-1.0%
GPR Aprea Investable REIT 100 Index-0.3%-0.3%MSCI AC ASIA PACIFIC1.0%1.0%
GPR Aprea Investable REIT Australia-4.0%-4.0%MSCI Australia0.0%0.0%
GPR Aprea Investable REIT Japan2.4%2.4%MSCI Japan-1.0%-1.0%
GPR Aprea Investable REIT Singapore1.3%1.3%MSCI Singapore1.0%1.0%
GPR Aprea Composite REIT Index Hong Kong-2.8%-2.8%MSCI Hong Kong2.0%2.0%
GPR 250 REIT United States Index0.0%0.0%MSCI USA -0.9%-0.9%
GPR 250 REIT United Kingdom Index-1.7%-1.7%MSCI UK-0.2%-0.2%
Based on the market close on January 29, 2020

All performance numbers are based on total gross returns in USD

Sources: GPR and Bloomberg