Asia REIT Market Insight 2023

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2022-2023 ASIA REIT MARKET INSIGHT

Also as of the end of June 2023, the average distribution yield for the 16 real estate asset-based REITs (comprising seven industrial park REITs, four affordable rental housing REITs, three logistics REITs, and two industrial plant REITs) was at 4.2%, representing an increase from the 3.3% of the nine projects in the same period last year, although the rise was primarily due to price drops in the secondary market.

Figure 14: Dividend Yield

10.0%

CHAPTER 4 THE GROWTH OF THE MAINLAND CHINA AND INDIA REIT MARKETS

8.0%

6.0%

4.0%

2.0%

0.0%

Industrial parks

Industrial plants

Warehousing and logistics

Affordable rental housing

Ecological conservation

Clean energy

Highway sectors

4.1 Mainland China REIT Market The overall infrastructure REITs market in mainland China experienced stable development in 2022, demonstrating continued popularity with investors. During the period this report section covers, from the end of March 2022 to the end of June 2023, a total of 17 new products were introduced into the public REIT market. The new entrants demonstrated development momentum across seven categories of underlying assets: industrial parks, warehousing and logistics facilities, industrial plants, affordable rental housing, highways, clean energy, and other ESG-related projects. At the end of June 2023, there were 28 public REITs listed in mainland China, with total market value standing at RMB87 billion, approximately 10% below the initial issuance value of RMB97 billion. Of the 28 REITs, seven were focused on highway assets, seven on industrial parks, four on affordable rental housing, three on warehousing logistics, three on clean energy, and two each were focused on industrial plants and ecological protection assets.

Data source: Wind, Cushman & Wakefield Valuation & Advisory Services

On March 24, 2023, the Mainland China Securities Regulatory Commission (CSRC) issued the Notice on Further Promoting the Normalized Issuance of Real Estate Investment Trusts (REITs) in the Infrastructure Sector. The Notice presents a total of 12 measures which are summarized into three areas as here:

1 2 3

Expand the types of pilot asset issuances to include retail projects, and prioritizing support for rural and urban commercial outlets projects, such as department stores, shopping centers, and farmers' markets, and community malls. In terms of projects for franchised operation rights and operating income rights, their IRR during fund duration should not be lower than 5% in principle, while for non-franchised operation rights and operating income rights projects, the projected annual net cash flow distribution rate should not be lower than 3.8% for the next three years. For affordable rental housing projects that issue infrastructure REITs for the first time, the net value of the real estate valuation in the current period should not be less than RMB800 million in principle.

Figure 13: Number of REITs in Mainland China