The Determinant Factors of Real Estate Investment Trust (REIT)’s Performance: Evidence from Asian REITs

Abstract

Real Estate Investment Trust (REIT) is one of the asset class investment options that come into view among investors whose searching for an alternative investment. It was considered as less risky as opposed to equities, bond, property, trust fund and others related investments materials with potential for earnings enhancement. REIT is a company or a trust that pools fund from individual investors, acquires and operates income-generating real estate, and distributes the income derived from their own properties as dividends. Securities Commissions (SC) has defined REITs as “property trust fund” or as an investment trust investment vehicle that invests or proposes to invest at least 50% of its total assets in real estate. An investment in real estate may be by way of direct ownership or a shareholding in a single-purpose company whose principal assets comprise real estate (SC, 2005). The development of REITs in Asian began with the introduction of Japan REITs in 2001, and then followed by Singapore, Hong Kong, South Korea, Taiwan, and Malaysia. Likewise, not with standing global economic uncertainties, Asia real estate investment trusts (REITs) were highly sought-after by investors. As according to Professor Graeme Newell in a report by the Asia Pacific Real Estate Association (APREA), most Asia REIT markets achieved higher returns, lower risk and superior risk-adjusted performance than their respective stock markets, especially since the Global Financial Crisis (APREA, 2012). Hence, Asian REITs had become an attractive alternative for global investors thus examining REIT’s performance is the vital factor that investors consider when they allocate capitals for their investments (Yu, The Determinant Factors of Real Estate Investment Trust (REIT)'s Performance: Evidence from Asian REITs