Property consultancy JLL sees more investors and property developers tapping real estate investment trust (REIT) to diversify their portfolio following the stable returns generated by the first REIT company.
AREIT Inc. recently announced it earned P1.23 billion last year, 42 percent higher than the previous year.
JLL said in a statement REIT is an attractive and substantial alternative investment vehicle for investors and will become bigger and will help buoy the economy.
“We believe REITs will play an important role in jumpstarting the economy from the adverse effects of the pandemic and will promote growth in the real estate sector,” said P. Ryan Isip, JLL Philippines head of Capital Markets. “Because of the nature of REITs, properties will need to be transparent in its income, occupancy, and prospects to make it more attractive to be invested in. Due to this, the REIT market promotes transparency in the real estate industry. Ultimately, REITs will help attract a lot of investors in the medium- to long-term and will pave way for us to develop capital investments in the country.”
JLL said more property developers will look into the REIT market to diversify their portfolio and to tap new capital to expand their real estate buildings. Profits earned from being a REIT-listed property may provide a cheap funding source for developers, raising fresh capital to finance future projects, which in turn will ramp up construction activities and employment.
JLL added developers are also looking into increasing their properties’ asset value to make them more attractive investments. “REIT-listed properties tend to be better managed and maintained to make them attractive for tenants to move in. Therefore, it becomes an attractive income-generating property for REITs,” said Isip.