Asia REIT Market Insight 2023

2022-2023 ASIA REIT MARKET INSIGHT

3.3 Total Return

The total return of a REIT is a key income indicator for investors, consisting of the change in the stock price per fund unit, and the dividend; and this provides a more comprehensive profile of a given REIT, from the asset end to the capital end. The following section selects the Tokyo SE REIT Index, iEdge S-REIT Index, and Hang Seng REIT Index to represent the overall market conditions in Japan, Singapore, and Hong Kong, respectively. In the first half of 2022, the indexes in the three key markets remained stable. However, in the second half, a trend of volatility across financial markets led to each index failing to recover to the levels recorded at the beginning of the year.

Figure 10: Performance of REIT index

In 2022, the Total Return Index of Hang Seng REITs (HSREIT TRI) in Hong Kong declined by 23.7%. From September 2021, the TRI started to enter a slow downward trend and hit a bottom in October 2022. It experienced a rebound in November and December, showing q-o-q growth of more than 10% in the last three months of the year. The downward performance of the HSREIT TRI was primarily influenced by the decline in the REITs Price Index (HSREIT PI). The iEdge Singapore REIT total return index (iEdge S-REIT TRI) was at -11.9% in 2022. According to the Singapore Exchange, the hotel and industrial/logistics sectors recorded the best total returns in 2022. In contrast, the data center and office sectors experienced the largest declines. However, this generated only limited impact as the two sectors account for only 5% and 15% of the total market value of REITs listed on the Singapore Exchange, respectively.

The Tokyo Stock Exchange REITs Total Return Index (TSEREIT TRI) reflects the relatively strong resilience of the Japanese REIT market. Its TRI declined 4.8% for the full year, with investors welcoming the Bank of Japan’s decision to keep interest rates steady, under new governor Kazuo Ueda. The hotel/apartment sector outperformed the J-REIT benchmark return in 2022. In contrast, the office sector posted the steepest decline, with the cumulative fall since Q4 2019 now at approximately 30%.

1200

1000

800

600

400

iEdge S-REIT Index

TSEREIT Index

HSREIT Index

Note: 1,000 points as of January 1, 2022. Source: Bloomberg’s database, compiled by Cushman & Wakefield Valuation & Advisory Services

Table 2: Total Return of Major REITs Index in Asia Markets

Total Return of Major REITs Index in Asia Markets

Market

Index

One-year Total Return

Japan

Tokyo SE REIT Index

-4.8%

Singapore

iEdge S-REIT Index

-11.9%

Hong Kong China

Hang Seng REIT Index

-23.7%

Source: SGX Chartbook, compiled by Cushman & Wakefield Valuation & Advisory Services

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