An Exploratory Study of Agency Costs of Sponsored REITs in Singapore, Hong Kong, and Japan

Abstract

Executive Summary. Singapore, Hong Kong, and Japan, which are the three most active real estate investment trust (REIT) markets in Asia, follow the external REIT model, which is typically tied to a sponsor. In this study, I examine the agency costs in the sponsored REITs of the Asian Big 3 REIT markets in an effort to understand the conflicts of interest in the sponsored REITs of the Asian Big 3. The overall evidence indicates that the agency costs of the sponsored REITs in the Asian Big 3 are not severe compared to the REITs in more mature markets, REITs elsewhere in the world, as well as real estate operating companies (REOCs) in their own national markets, suggesting that sponsored REITs in the Asian Big 3 emulate the internally advised REITs in response to market pressure.