Taiwan REITs

Looking at the growing potential of real estate markets in the Asia, Taiwan International Investment Management Co has made known that it will create the nation’s first regional real estate investment trusts (REIT).  The investment unit of Taiwan International Securities Corp is trying to hand over REIT and high dividend property stocks.  That is supposed to cover eleven countries in the Pacific region, counting Taiwan, South Korea, Hong Kong, Singapore and Australia.

With special tax breaks and stable returns, REITs have turned out to be a well-liked investment tool.  REITs buys and administer assets, including shopping malls and office buildings.  In return, they pay dividends to shareholders from the earnings they make.  Knowing the positive economic position and stronger currencies, coupled with enormous growth in China and India, the property market in the Asia region has been booming in recent years. This situation gave REITs high dividend returns.

Asia’s economic enlargement, not including Japan, is likely to reach 6.9 percent this year. REITs in Australia, South Korea and Hong Kong bring in of more than 6 percent last year of dividends. The market price of REITs in the Pacific region could hop from US$7 billion last year to US$75 billion in 2010.

The Link REIT, Hong Kong’s first property group, brought up $19.8 billion (US$2.6 billion) in November last year from a share auction, becoming the world’s major initial community offer of a property organization. In difference, Taiwan’s REIT seems to have differed from their Asian matching part.  A report by Taiwan Ratings Corp released said that family REIT may be damaged by increasing interest rates and diminishing rental yields.

The nation’s central bank started stimulating interest rates in October 2004 and had moved up its discount rate by 87.5 basis points to 2.25 percent as of Dec. 23 last year. The bank could increase the standard interest rates even more, after the lead of the US Federal Reserve. The Financial Supervisory Commission (FSC) has wished for a reconsideration of the law to reinvigorate Taiwan’s real estate investment trust (REIT) market by growing the range of REIT investment and fund raising.

All through a REIT discussion planned by the Land Bank of Taiwan on July 2, FSC Section Chief Ho Li-yang reported that the draft revision, which is in anticipation of way by the Legislative Yuan, would permit the organization of development-type REIT.  That can put in real estate plans when they are in the stage of planning, building, rebuilding or restructuring.  Accessible REITs by difference is restricted to investment in finished property.  Development type REITs has a superior profit possible, but also take a bigger danger.