Real Estate Investment Trusts (REITs) around the world continue to show signs of recovery but still face some severe challenges, especially in raising fresh capital, according to U.S.-based assurance, tax, transaction and advisory services firm Ernst & Young’s Global perspectives:2012 REIT report.
According to the report, of the six REIT jurisdictions examined in this year’s report, Singapore had the best return performance in 2011. The one year rate of return for Singapore REITs (S-REITs) exceeded 21.8%, a performance which put the country’s USD30bn REIT sector ahead of Japan (17.4%), Australia (15.6%), the US (15.3%), the UK (14.8%) and France (11.85%).
IPO activity across all sectors of the global economy was hit hard by the downturn, as Ernst & Young reported earlier this year in its Global IPO update. There was a 40% decrease in global IPO activity in 2011 and this trend continued into 2012.
Ernst & Young’s 2012 Global Perspectives:2012 REIT report on REITs says that during the first quarter of 2012 the only country outside the US in which REITs had the ability to raise equity through secondary offerings was Japan.
The global financial crisis also had a severe and lengthy impact on liquidity in the REIT market but the prevailing trend is clearly upward. Globally, investment volumes were up 31% in 2010.
Yet, according to the report, the challenge remains for REIT teams to drive future growth through astute acquisitions, careful asset management and well-timed dispositions — all within an appropriate capital structure.
To download the complete report or to access sections relating to these countries specifically, visit www.ey.com/us/realestate