Strong first quarter for global property and REIT markets

The global property and real estate investment trust (REIT) markets have unexpectedly continued their “blistering” growth in the first quarter to March 2006, according to Standard & Poor’s (S&P).

In a report that highlighted property and REIT market developments, S&P claimed the total market capitalisation for the global property market crossed US$1 trillion this quarter.

This was a 15.3 per cent increase for the quarter due to property stock appreciation and new listings.

Furthermore, S&P said global REIT legislation, new insurances and double-digit rates of returns had caused REIT markets to explode in the past few years.

Currently, REIT global market capitalisation is more than 55 per cent of the total property market, more than double of what it was 10 years ago.

S&P said strong global economic growth had pushed up rent and increased the demand for homes, office space and hotels.

This strength was the key to strong performances in the property and REIT indices.

In the report, S&P also made predictions regarding different countries’ property market performances.

“In Europe, the UK seems set to launch its REIT legislation for 2007, making the European REIT market even more robust and attractive,” the report said.

“Beside a spate of mergers and acquisitions, 2007 should bring about several conversions of large property companies to REITs in the UK.

“Asian property markets are expected to see several new REIT listings this year, with new entrants in the space coming from China and India.

“Moreover, by permitting cross listings of REITs from other regions, Singapore expects to make itself the regional hub for REITs in coming years.”

S&P also said Australia’s property market remained largely flat this quarter.