SGX to launch Asia’s first international REIT futures

August 4, 2020.

said Tuesday that it is launching the first international real estate investment trust futures products in Asia, reflecting a growing demand among global investors for real estate-related investment products. 

The exchange said it will be rolling out two international REIT futures, based on indexes tracking “diverse” REITs listed in Singapore, Hong Kong, Malaysia and Thailand. The two products, SGX FTSE EPRA Nareit Asia ex-Japan Index Futures and SGX iEdge S-REIT Leaders Index Futures, will launch on Aug. 24, the exchange said. 

The FTSE EPRA Nareit Global Real Estate Index series is a “widely-followed global benchmark,” with about $340 billion of assets under management “actively benchmarked or passively tracking the indices,” Singapore Exchange said, adding that the iEdge S-REIT Leaders Index is the “most liquid index-basket representation of the Singapore REIT market.”

“We continue to broaden our Singapore franchise with innovative products that capitalize on the strengths of our cash equities and equity derivatives businesses,” Michael Syn, head of equities at Singapore Exchange, said. 

“Singapore is the REITs growth capital of Asia, attracting global institutional investors looking for defensive returns, particularly in today’s volatile markets and low interest-rate environment,” Syn said. 

The first REIT listing on the Singaporean exchange was 18 years ago, and since then the exchange has been able to establish a “strong REIT ecosystem with increasing investor interest, deep liquidity and active issuer participation,” he added.

Both of the new listings were created in accordance with U.S. guidelines, allowing for distribution to U.S. and global institutional investors, Singapore Exchange said. 

In 2019, around 45% of REIT initial public offerings globally debuted on Singapore Exchange, beating the other large REIT markets of U.S., Australia and Japan, the exchange said. Singapore is one of the two largest REIT markets in Asia, the other being Japan, according to the exchange. 

Singapore Exchange said it has 44 REITs and property trusts with a combined market capitalization of SGD $98 billion ($71 billion), and that the market capitalization of Singapore REITs has risen at a compounded annual growth rate of 15% in the last decade.