THE SINGAPORE REIT MARKET
The market for real estate
investment trusts (REITs) in Singapore has grown significantly.
A REIT is a company that owns, and in most cases, operates
income-producing real estate such as apartments, shopping
centers, offices, hotels and warehouses. Some characteristics
of REITs listed in Singapore include:
- The trust pays out 90 % of taxable
income as dividends to unit holders.
- At least 70 % of assets are invested
in real estate.
- Debt does not exceed 35 per cent
of the value of the deposited property.
The first REIT was listed
on the SGX in 2002. As at 31 March 2005, there were
five listed REITs worth S$10.6 billion, including Singapores
first cross-border REIT which has properties in Hong
The value of the listed REITs has also grown steadily
since their initial public offerings, as a result of
an improved economic outlook, a stronger stock market
and an aggressive yield-accretive acquisition of properties
by the REIT managers.
Several regulatory and tax measures have been put in
place to facilitate the development of the REIT market.
Under the Property Fund Guidelines in the Code on Collective
Investment Schemes, total borrowing limit on a REIT
was raised from 25% to 35%, in 2003. Those with single
A credit rating can now borrow beyond 35%.
Another change introduced by the
Ministry of Finance in 2005 is a 3% stamp duty waiver
on the transfer of properties into REITs listed on SGX.
A withholding tax of 10% on REIT distributions to foreign
investors was also granted.