Colliers expects Philippine REITs to expand, diversify portfolios

Colliers, an international diversified professional services and investment management group, expects greater portfolio expansion and diversification to drive the growth and investor interest in the Philippine real estate investment trust, or REIT, sector.

“Diversification will be the name of the game,” said Colliers Philippines in a recent report titled “Onward and Upward: Expansion and diversification of Philippine REIT to benefit property stakeholders.” It noted that the local REIT market is already primed for further diversification, with firms likely to expand their portfolio beyond the usual office and commercial buildings.

“We even see some firms exploring the feasibility of divesting other asset classes including business parks, data centers, as well as co-working and coliving facilities. We even recommend that firms explore the viability of infrastructure and renewable energy projects,” it added.

Just recently, the Ayala Group-led AREIT acquired a 276-hectare property in Zambales from ACEN Corp., a listed renewables energy unit of the Ayala Group, in exchange for shares. The land will be leased to ACEN for the operation of a solar farm.

The model isn’t unique. 

Listed Citicore Energy REIT actually has a portfolio of properties leased renewable energy companies with total installed capacity of 145 megaWatts, spread across the country on lands that total 199 hectares. It also acquired land in three Luzon provinces covering 518 hectares that will be leased in the future.

Colliers encourages property firms to further test the market to capture opportunities from a constantly evolving and developing Philippine REIT sector.  It added that REITs and investors should take a closer look at proposed legislations in Congress that could impact the future of the sector.

Based on their closing prices on Dec. 1, only two of the eight listed REIT—AREIT and Premiere Island REIT—are trading above their initial public offering price due mainly impact of the pandemic on building occupancy and recent increases in interest rates that raised companies borrowing cost.

Among nine Asian countries, the Philippines and Taiwan are the last two in terms of the number of listed REITs and market capitalization.