MORE investors and property developers are expected to tap into the real estate investment trust (REIT) market after the country’s first REIT showed stable returns, JLL Philippines said on Thursday.
Investments in REIT may even help boost the economy, the real estate services and consultancy firm said.
“We believe REITs will play an important role in jumpstarting the economy from the adverse effects of the pandemic and will promote growth in the real estate sector,” P. Ryan Isip, JLL Philippines’ head of capital markets, said in a press release.
The firm said market sentiment had been positive after Ayala-sponsored AREIT, Inc. reported a 42% jump in net earnings to P1.23 billion last year.
“Because of the nature of REITs, properties will need to be transparent in [their] income, occupancy, and prospects to make it more attractive to be invested in. Due to this, the REIT market promotes transparency in the real estate industry,” Mr. Isip said.
The REIT market has become attractive as more property developers are expanding their portfolios. REIT-listed properties may be cheap funding sources for developers looking to raise capital for other projects.
Developers who wish to increase their properties’ value may consider listing them under a REIT to boost marketability.
“REIT-listed properties tend to be better managed and maintained to make them attractive for tenants to move in,” Mr. Isip said.
The REIT market also has opportunities for growth in logistics and co-living sectors, and JLL Philippines believes that this will further attract new investors.
Despite the office sector being stagnant due to the shift to work-from-home arrangements, the consultancy firm expects REITS to attract property developers.
“Outsourcing firms in Metro Manila that are looking to expand in other key urban areas such as Metro Cebu and Davao City will need office properties to move into. This is where developers can come in to meet the demand, and this demand will make the office sector still an attractive asset class for REITs in the long term,” Mr. Isip said.
“Ultimately, REITs will help attract a lot of investors in the medium- to long-term and will pave way for us to develop capital investments in the country,” he added. — Keren Concepcion G. Valmonte
