Investors raise concern over limited growth potential of car park portfolio Sino Land is considering bundling lower-growth assets such as car parks into its investment properties portfolio in a move that investors fear stretches the popularity of real estate investment trusts to breaking point. With its eyes firmly on the success of the Link Reit, the developer wants to cash in on the fashionable investment vehicles, hoping to tap the market for US$300 million to US$500 million and indicating to investment banks that car-park assets - rather than prime investment properties such as shopping centres - will be in its reit. Investment banks have been less than enthusiastic about the proposal, with sources saying the reit can be scrapped if more attractive assets are not included. Analysts say they doubt whether car parks alone can offer growth, even though they deliver an investment yield ranging from 6 per cent to 8 per cent. 'To many developers, car parks are basically a low-cost commodity,' said Adrian Ngan Wai-hung, BNP Paribas Peregrine head of regional property research. 'Depending on their location, growth prospects can be limited, although they offer stable rental income.' An analyst at a European brokerage agreed, suggesting that assets such as car parks might not suit the appetite of investors looking for growth and yield, the key components of a successful reit. 'With all due respect, car parks are certainly not mainstream assets,' he said. Sino Land, which has been an aggressive developer, last year owned 4,224 parking spaces, or 1.56 million square feet, according to its annual report. The company's car-parking spaces accounted for about 17 per cent of its 9.2 million sq ft in investment properties. No details were available on how much revenue the company's parking spaces generate, but its gross rental income from its investment properties grew 8.21 per cent to $1.23 billion in the year ended June. 'Rental growth of car parks does not have a direct link with the surge of rents in offices or property prices,' said Biu Cheng, general manager of the commercial department at Centaline Property Agency. Sino Land has so far denied that it is considering a reit listing. 'We have been approached by investment banks, but no plan, no plan at all ... no plan at the moment,' Sino Land chairman Robert Ng Chee Siong said last night. Reits - listed funds that buy and manage property and distribute most of their income as dividends - have become a popular fund-raising vehicle after the strong debut of the government's $20 billion Link Reit in November. Developers have been piling into the popular investment trusts, following up with the Prosperity Reit and GZI Reit. However, industry watchers claim that some of the properties lumped into reits are older properties or industrial buildings that hold little attraction for speculators. Shares in Sino Land continued to rally yesterday, surging 6.01 per cent to close at $11.45. The stock has gained 9.04 per cent this week, compared with 0.16 per cent overall growth in the Hang Seng Index.