Once Bitten, Twice Shy?
At university, I would often read cases studies on the spectacular collapse of various Australian real estate investment managers during the 2008 GFC (Centro Property springs to mind). Surprisingly, I learned that some familiar brands had overseas operations:
- Mirvac Industrial Trust (Chicago, U.S)
- Charter Hall Office Real Estate Investment Trust (U.S)
- Dexus Property Group (U.S)
- ING (Canada & Europe)
- GPT (U.S & Europe)
- Macquarie (U.S & Europe)
- Stockland (UK & Europe)
How About Asia?
Some of the companies that have dabbled in Asia (that I know of) include:
- Westfield (10% share of Suria Kuala Lumpur City Centre in Malaysia in 1998, exited in 2000),
- Babcock & Brown Japan Property Trust / Astro Japan Property (sold to Blackstone in 2017),
- Galileo Japan Trust (de-listed from the ASX in 2016, re-listed in Tokyo as Sakura Sogo REIT, then taken over by Star Asia in 2020).
Although most groups wound back their overseas operations, some were able to emerge from the smoldering ashes of the GFC and build a presence in Asia:
- Goodman Group (operations in Japan, Hong Kong & China),
- Lend Lease (operations in China, Singapore, Japan, & Malaysia),
- Challenger (retail portfolio in Japan).
- Cromwell European REIT (technically not Asia focussed and listed recently in Singapore in 2017)
Will we see more Aussie companies expand to Asia?
Very unlikely. Investors have long memories and would be reluctant to let local companies expand outside of their areas of expertise.
There is pressure to show a quick return on investment and investors are often unwilling to look long-term to Asia, despite it being the fastest-growing region (for the foreseeable future).
There will be no incentive to go overseas until returns become attractive relative to Australia. Contrast this to real estate companies in Singapore where a majority of REITs have operations overseas. For example:
- CapitaLand (presence in 32 countries including Australia, Malaysia, Japan, China, Cambodia, Vietnam),
- Mapletree (presence in 13 markets including Australia, China, Hong Kong, India, Japan, Malaysia, South Korea, Vietnam),
- Frasers (presence in 25 markets including Australia, China, South Korea, Japan, Vietnam, Indonesia, India, Thailand).
Granted Singapore is an extremely small country, but they have a long-term view and understand the importance of diversifying and building long-term relationships. For example, CapitaLand entered Vietnam and China in 1994.
Is it too late for Aussie REITs to expand overseas, especially to Asia?