Asia REIT Market Insight 2023

2022-2023 ASIA REIT MARKET INSIGHT

Figure 8: Dividend Yield Return by Property Types (%)

Analysis of dividend yields alone is not sufficient to determine the overall performance and integrated earnings of a REIT. Sometimes, REITs with higher dividend yields may face challenges such as insufficient growth or volat i le performance, requi r ing them to compensate for high volatility in share price with higher dividends. Conversely, REITs with lower dividend yields may not necessarily underperform, and could have the potential for higher growth with rising stock prices. Investors need to weigh both dividend income and capital gains, although dividend income is generally less volatile when compared to capital gains. The dividend yields of REITs by property type have continued the trend seen in the previous year. Mixed-use, office, and retail REITs have enjoyed higher dividends, ref lecting the economic cyclical characteristics of these assets. Industrial/logistics, healthcare, and data center assets have been favored by investors as new growth drivers in recent years. Some of these REITs present excellent pr ice performance and thus have lower dividend yields.

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

12.4%

9.8%

8.6%

8.1%

8.1%

7.4%

7.0%

7.0%

6.6%

6.0%

5.0%

4.8%

4.5%

4.4%

4.3%

3.9%

3.8%

3.8%

2.4%

Singapore 综合 办公 零售 工业 / 物流 酒店 公寓 健康医疗 数据中心 日本 新加坡 中国香港 Mixed Use Office Industrial/ Logistics Retail Hotel Apartment Healthcare Data Center Hong Kong, China Japan

Source: Bloomberg Database, Hong Kong Exchanges website, SGX website and Tokyo Stock Exchange website, compiled by Cushman & Wakefield Valuation & Advisory Services

By market, the hotel sector in Japan delivered the lowest dividend yield among all property types, standing at only 2.4%. This is far lower than the 6.1% recorded in 2020, but an improvement on the 1.9% performance of 2021. Nevertheless, the border reopening has seen the hotel sector already recover to the level reported in Q4 2019. In Singapore, the lowest dividend yield is also in the hotel sector, at 4.4%, 90 bps higher than the previous year. In Hong Kong, the retail sector provided the lowest dividend yield, represented by the Link REIT and Fortune REIT, at 5.3% and 6.8%, respectively.

Figure 9: Historical Average Dividend Yield

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

Office REITs in the three prime markets offered the highest yields among all property types. Office REITs in Singapore enjoyed dividend yields of 13.5%. All office REITs in Singapore delivered higher yields than the average of 7.9% and the yields of two REITs, PRIME U.S. REIT and MANULIFE U.S. REIT, both invested in the U.S. property market, exceeded 17%. Nevertheless, according to data disclosed by NAREIT, office REITs in the U.S. experienced a significant decline of 37.6% in total returns in 2022. In the healthcare sector, the dividend yields of J-REITs was at 3.8%, down from the previous year, primarily due to rising operational costs. Healthcare REITs in Singapore produced a dividend yield of 7%, chiefly driven by a yield of 10% from FIRST REIT.

Singapore 日本 新加坡 中国香港

Japan

Hong Kong, China

Source: Bloomberg Database, Hong Kong Exchanges website, SGX website and Tokyo Stock Exchange website, compiled by Cushman & Wakefield Valuation & Advisory Services

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