Hong Kong is eager to ride the reit wave
Developers and consultants are jumping in, but experts say experience is a must
The success of recent real estate investment trusts and prospects of more reit launches in the coming months have encouraged property consultants to raise their profile in this fast-growing market - expected to be worth more than $50 billion this year.
Since the Housing Authority's successful relaunch of its Link Reit late last year, property consultants Jones Lang LaSalle, DTZ Debenham Tie Leung and Savills have been offering a range of services including asset management, property management, valuations and market surveys.
Savills Property Management managing director Kendrew Leung said up to 10 companies were considering launching reits following a rise in interest among investors. He said the company was conducting estate value appraisals for three or four reit candidates.
Henderson Land Development has been widely tipped to launch Hong Kong's fourth reit in the second quarter, to raise an expected US$400million to US$500million. Other possible reit candidates include Sun Hung Kai Properties, Lai Sun Development, Sino Land, New World Development, Nan Fung Development and Hang Lung Properties.
The Housing Authority raised $19.8 billion in November with its Link Reit. The Prosperity Reit from Cheung Kong (Holdings) and Guangzhou Investment's GZI Reit were quick to follow, each raising about $2 billion.
In view of the potential, Mr Leung said the reit market would attract newcomers and would be more competitive.
DTZ Debenham Tie Leung is the latest property consultant to enter the fray.
Executive director Chiu Kam-kuen said the company had recently formed a division to provide full services for companies planning to sell their assets as reits.
Cheung Kong also wants to gain a foothold in the sector. The company has a 30per cent stake in ARA Asset Management, which manages $20 billion of reit assets.
Justin Chiu Kwok-hung, executive director of Cheung Kong and chairman of ARA Asset Management (Prosperity), the company which manages the $2.97billion Prosperity Reit, said reit asset management could provide a new stream of business for the Cheung Kong group.
But Jones Lang LaSalle head of management services Eric Lee said not everyone could enter the market. 'Every company wants to jump on the reit bandwagon but it is not easy to build up your team if you do not have genuine experience in managing a reit portfolio,' he said.
Jones Lang LaSalle began building its reit expert team two years ago.
'Even if we have overseas experience in managing reit properties, we still need to learn the development trend of the local market,' Mr Lee said.
He said the reits would provide a new revenue stream following cut-throat competition and a significant drop in supply of new residential and office projects in the property management market.
'There is not much potential for further development in the property management market because it is entering into a price war,' he said.
Mr Leung of Savills said: 'Local firms are unlikely to compete with international property consultants in this arena as they do not have such knowledge.'
Savills offers reits management services in South Korea and Singapore.
