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The significance and performance of Singapore REITs in a mixed-asset portfolio

Author

Listed:
  • Graeme Newell
  • Anh Khoi Pham
  • Joseph Ooi

Abstract

Purpose - – REITs have taken on increased significance in Asia in recent years, with Singapore REITs (S-REITs) becoming an important property investment vehicle since 2002. The purpose of this paper is to assess the significance, risk-adjusted performance and portfolio diversification benefits of S-REITs in a mixed-asset portfolio context in Singapore over 2003-2013. The post-GFC recovery of S-REITs is also assessed. Design/methodology/approach - – Using monthly total returns, the risk-adjusted performance and portfolio diversification benefits of S-REITs over 2003-2013 is assessed, with efficient frontiers and asset allocation diagrams used to assess the role of S-REITs in a mixed-asset portfolio. Sub-period analyses are conducted to assess the post-GFC recovery of S-REITs. Findings - – S-REITs delivered strong risk-adjusted returns, being the best-performed asset class, but with little portfolio diversification benefit over 2003-2013. Whilst taking on reduced risk, but with less portfolio diversification benefits in recent years, S-REITs are seen to be robust relative to the other major Singapore asset classes; contributing significantly across the risk spectrum; particularly in the post-GFC period, where S-REITs have been the best-performed asset class in Singapore. Practical implications - – The results highlight the important strategic role of S-REITs in a Singapore mixed-asset portfolio. The strong risk-adjusted performance has highlighted the robustness of S-REITs, with S-REITs contributing to the mixed-asset portfolio across the portfolio risk spectrum; particularly in the post-GFC period. This robustness highlights the ongoing strategic role of S-REITs in a Singapore mixed-asset portfolio, as well as the ongoing development of S-REITs as an important pan-Asia hub for REITs. Originality/value - – This paper is the first published empirical research analysis of the risk-adjusted performance of S-REITs and the role of S-REITs in a portfolio. Given the increased significance of REITs in Asia, this research enables empirically validated, more informed and practical property investment decision-making regarding the role of S-REITs in a mixed-asset portfolio and S-REIT performance in a post-GFC context.

Suggested Citation

  • Graeme Newell & Anh Khoi Pham & Joseph Ooi, 2015. "The significance and performance of Singapore REITs in a mixed-asset portfolio," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 33(1), pages 45-65, February.
    • Handle: RePEc:eme:jpifpp:v:33:y:2015:i:1:p:45-65
    DOI: 10.1108/JPIF-12-2010-0027
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    Citations

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    Cited by:

    1. Liow, Kim Hiang & Huang, Yuting, 2018. "The dynamics of volatility connectedness in international real estate investment trusts," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 55(C), pages 195-210.
    2. Kowalke Krzysztof & Funk Bernhard, 2022. "Lessons from the US and German Reit Markets for Drafting a Polish Reit Act," Real Estate Management and Valuation, Sciendo, vol. 30(1), pages 1-12, March.
    3. Graeme Newell, 2021. "Future research opportunities for Asian real estate," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 25(2), pages 272-290, April.

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