It is noteworthy that the introduction of REITs is a move that is important for the further development of our capital markets. REITs represent an interesting new asset class that provides investors the opportunity to own a part of a pooled property investment by way of a single security transaction, in a vehicle with transparent, regular price discovery. They offer the potential for investors to share in the benefits of a dividend yield and gain from the potential upside in value. Products like the CapitaMall Trust offer interesting investment and diversification opportunities to investors and participants in our markets.
Given that much of the current stock of prime properties is held by property developers, investing in property assets will undoubtedly become more accessible to the general public through REITs. A diversified REITs portfolio, even one based on assets from the same cluster of real estate, will reduce the reliance on single property and tenant, a feature which compares favourably to directly owning real estate.
On the international front, REITs and similar products have proven to be quite popular. In the U.S., the REITs market experienced significant growth, especially over the past 10 years. As of Dec 2001, there are 182 REITs in the U.S. with a market capitalization of about US$155 billion. In Australia, where REITs are known as listed property trusts, this range of product is currently ranked the fifth largest sector on the Australian equity market. It has grown in market capitalization from A$5 billion to A$44 billion since 1992. Whether or not this trend will catch on in Singapore remains to be seen. However, the success of the product in these markets bears testimony to the strong investor interest in REITs, and undoubtedly has encouraged the development of this product.
With the successful launch of CapitaMall Trust, which is both significant and timely, I am confident that more REITs will surface in the market, be they based on specific or diversified clusters of real estate, ranging from retail, commercial, industrial to residential properties or property-related assets.
Innovation is a necessary element for progressing any marketplace. I am pleased that forward looking industry leaders such as CapitaLand are partners in developing a more vibrant marketplace through the creation of exciting and diverse products such as the one we are launching today.
On that note, may I congratulate CapitaLand and Mr Liew Mun Leong for their pioneering efforts in the development of Singapore's real estate investment trust market and wish them every success with the CapitaMall Trust.
Thank you.
