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REITs Outperformed Equities As Capital Markets Roller-coaster In March

REITs Outperformed Equities As Capital Markets Roller-coaster In March

Safe-haven markets Singapore and Australia drive strong Asia Pacific REIT performance

By Patrick Ma, Director, Listed Products and Research

April 5, 2022 – Asia Pacific REITs rose 3.6% in March, outperforming equities’ 2.7% gain. Singapore and Australia REITs were among the best-performing markets, rising 4.9% and 5.9%, respectively, as investors sought defensive assets.

Globally, REITs climbed 5.8%, while equities gained 2.8%. Global capital markets had initially edged downwards in March amid three concerns: the ongoing war between Russia and Ukraine, lingering inflationary pressure fuelled by rising energy and commodity prices as a result of the conflict, and the US Fed’s first policy rate hike by 25 basis points, which raised the expectations of further rate hikes. 

Markets later rebounded, supported by indications of progress in cease-fire talks between Russia and Ukraine after Russian advances were stalled. Global equities then reversed losses seen in early March and ended the month with a 2.8% gain. 

For the first quarter of 2022, global REITs fell 3.4%, still outperforming global equities’ 5% decline. 

Regardless of a possible stand-down of the Russia-Ukraine war, we believe the trends of deglobalisation and development of regional blocs will remain dominant. Going forward, inflationary pressure will stay strong and become entrenched. With the US Fed starting to increase interest rates in March, the market is also expecting interest rates to rise. 

Given such a macroeconomic backdrop, we expect REITs to benefit from inflationary expectations and demand for real assets. The Russia-Ukraine war has also highlighted the need for supply chain security and onshoring of manufacturing bases, which stimulates further investment in logistics assets amid supply chain adjustments. 

On the other hand, while most developed countries’ economies are slated for reopening as concerns over the Covid pandemic fade, we expect office, retail and hospitality sectors to start rebounding back to normal. 

REIT IndexPerformanceCorresponding equity indexPerformance

Mar 2022YTD-2022
Mar 2022YTD-2022
GPR 250 REIT Index 5.8%-3.4%MSCI WORLD2.8%-5.0%
GPR Aprea Investable REIT 100 Index3.6%-3.9%MSCI AC ASIA PACIFIC2.7%-5.9%
GPR Aprea Investable REIT Australia4.6%-0.2%MSCI Australia11.1%7.3%
GPR Aprea Investable REIT Japan1.4%-7.0%MSCI Japan-0.3%-6.4%
GPR Aprea Investable REIT Singapore5.9%1.3%MSCI Singapore0.5%-1.7%
GPR Aprea Composite REIT Index Hong Kong1.1%-6.8%MSCI Hong Kong0.0%-1.8%
GPR 250 REIT United States Index6.7%-3.8%MSCI USA 3.5%-5.2%
GPR 250 REIT United Kingdom Index2.7%-5.1%MSCI UK0.1%1.8%
Based on the market close on March 31, 2022

All performance numbers are based on total gross returns in USD

Sources: GPR and Bloomberg