The imminent introduction of Real Estate Investment Trusts (REITs) in Thailand will be a major development for Thailand’s property investment market, according to Colliers International Thailand.
New regulations governing the establishment of Real Estate Investment Trusts (REITs) for the Thai market and expected to be released soon, and they are widely predicted to be greeted by keen investor interest.
“REITs will essentially offer investors the opportunity to invest in real estate with controlled management without the hassles of direct investment,” said Nukarn Suwanikul, Associate Director for Investment at Colliers. “Although they look like the current Type 1 listed property funds, they are actually quite different.”
REITs are well established around the world, with Singapore, Australia, Japan and Hong Kong being major markets in the region. Thailand has relied to date on Type 1 funds which tend to be small and illiquid, partly because of the difficulty of adding properties and the very limited borrowing allowance.
Thai REITs are expected to allow borrowing of up to 65 percent in some circumstances, compared to a maximum of 10 percent for Type 1 funds. “Another key difference is that property companies will be allowed to become managers of REITs, rather than having to rely on asset management companies,” added Nukarn. “This is in line with international practice where REIT management is an important business line for property companies.”
Nukarn believed that the introduction of a REIT regime in Thailand constitutes a major development for the country’s property investment market. Apart from giving substantial benefits to both large and small investors and property owners, REITs will signalling Thailand’s entry onto the international stage as a more mature investment destination.
“Due to improved transparency and liquidity, REITs should create more confidence for both local and foreign funds and investors,” she said.
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