DBS, CapitaLand and other local stocks will be boosted by Singapore' s long-term wealth creation: Morgan Stanley

Abundant liquidity and a large pool of retail investors will drive the demand.

 

CapitaLand Investment Ltd. (CLI) plans to list its first real estate investment trust (REIT) in China, where risk sentiment has started to recover amid a buying frenzy for companies that own income-generating properties

 

&ldquo China is a compelling market for the launch of CapitaLand Commercial C-REIT due to its abundant liquidity and growing pool of domestic institutional investors seeking stable, income-generating investment opportunities amid capital movement restrictions,&rdquo Puah Tze Shyang, CapitaLand Investment (China) CEO, told Singapore Business Review.

 

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Retail China REITs (C-REIT) have generated an average total return of about 52% since listing, with yields at around 3.8%, reflecting strong investor demand, he said in an emailed reply to questions.

 

The global real asset management company seeks to list CapitaLand Commercial C-REIT (CLCR) on the Shanghai Stock Exchange (SSE) by the last quarter. It could become the first foreign-sponsored retail C-REIT and the first by a Singapore-based company.

 

China&rsquo s $34b (RMB190b) REIT market had 65 listed REITs as of 9 May, with eight focused on retail.

 

CLCR will be CLI&rsquo s eighth listed fund if approved, reinforcing CLI&rsquo s position as Asia Pacific&rsquo s largest REIT manager by market capitalisation. 

 

CLI holds stakes in seven listed funds which have a total market capitalisation of about $37b. Five of its funds are listed in Singapore and one in Malaysia. CLI also recently entered the Japan REIT market through the strategic investment in SC Capital Partners Group. 

 

&ldquo The proposed listing supports our broader strategy to pursue asset-light growth and capital recycling,&rdquo Puah said. &ldquo It aligns with our strategic goal to expand our footprint in China by tapping into perpetual domestic capital.&rdquo

 

Puah said CLCR would support CLI in widening its investor base, complementing its Singapore-listed CapitaLand China Trust (CLCT). 

 

CLCT targets Greater China, attracts global investors, and holds a mix of assets, whilst CLCR focuses on retail properties in the mainland and caters to local investors, he said. China is home to about 200 million retail investors. 

 

C-REITs were only allowed to hold retail assets in 2023 and were limited to infrastructure and housing assets.

 

CLCR, which will focus on the mainland&rsquo s developed urban areas, will hold two assets&mdash CapitaMall SKY+ in Guangzhou and CapitaMall Yuhuating in Changsha, Puah said.

 

CapitaMall SKY+ is co-owned by CLI and CapitaLand Development, while CapitaMall Yuhuating belongs to CLCT. All three are strategic investors in CLCR.