Thailand Real Estate Investment Trusts will continue to Grow in 2018
Real estate investment trust (REIT) business in Thailand will continue growing in 2018 thanks to low interest rates and a volatile stock market, says AIM REIT Management Co.
Mr Amorn, AIM REIT’s chief executive, likes REITs’ lower risk profile than stocks.
Amorn Chulaluksananukul, AIM REIT's chief executive, said returns for industrial REITs will remain above 7% in 2018, higher than the deposit rate and money market fund returns.
"This kind of investment is still attractive to institutional and individual investors who want sustainable returns," he said.
The company's AIM Industrial Growth (AIMIRT) was listed on the Stock Exchange of Thailand in January this year with 2.1 billion baht in assets. The company expects the fund to generate a 7.38% return in 2018.
AIMIRT invests in cold storage and warehouse capacity for JWD Info Logistics Plc and TIP Group warehouses. AIMIRT assets have a 100% occupancy rate.
There are 21 REITs on the SET, six of which were listed last year, including three office building REITs (GLANDRT, BOFFICE, and B-WORK), two hotel REITs (GAHREIT and SHREIT), and one warehouse REIT (AIMREIT).
Seven property funds were reclassified as REITs last year in order to take advantage of the property fund and asset transfer fee deductions implemented that year.
Property funds that transferred to REITs last year include: CPNRF (to CPNREIT), SSTSS (to SSTRT), DTCPF (to DREIT). Property funds that folded into existing REITs include: WHAPF (into WHART), and TFUND, TLOGIS and TGROWTH, all of which were integrated into TREIT.
"REITs have a lower risk profile than stocks, but generate higher returns than fixed income. It is an alternative investment, and property operators have expressed a growing interest in using REITs to raise funds for rental income property in the future," said Mr Amorn.
Charasrit Voravudhi, managing director of AIM REIT, said REIT investment rules are more flexible than those of property funds, which has led him to expect more independent REITs to enter the sector.
"Industrial REITs still have room for growth in Thailand," he said. "Property in prime locations running at full capacity generate good returns".
AIM REIT's management licence was granted by the Securities and Exchange Commission in January 2017.
"We are here to fund developers and debt obligations, as well as protect unit holders' interests transparently and professionally," said Mr Charasrit.
REITs are common in other parts of the world, and are becoming a mainstream alternative for developers in the region to recycle their capital and reduce capital investment, he said.