Hong Kong’s Top 5 REITs to Invest in
Hong Kong is considered to be one of the most expensive cities in the world to live in 2018; therefore, owning land in Hong Kong is like holding gold in your hand. This city is, without a doubt, one of the best cities where you can invest in property. To get an idea, an apartment with one bedroom in the city center is worth $2 million.
Therefore, investing in real estate in Hong Kong is open only to the rich people who can afford to buy properties and then use them in one way or another. However, if you are looking to invest in the commercial business and own properties such as hotels, office buildings or shopping malls, things are more difficult even for the super-rich. You would have to be a billionaire to own such a place in Hong Kong 2018. One office building can cost anywhere from a few million to a few billion dollars in Hong Kong.
Investing in REITs in Hong Kong
So, the only option to invest in commercial and office spaces in Hong Kong without spending a fortune is to invest in REITs instead. REITs offer you the chance to own a part of a multibillion-dollar property and earn profit out of it. Plus, investing in REITs is a great way to build stable income from dividends, which lets you focus on other businesses as an investor.
Real estate investment trusts act as funds that own real estate properties which generate income for the investors. These trusts are a combination of stock investments and real estate, increasing benefits for investors that are looking forward to accessible ways to earn a good profit.
So, what are the advantages of REITs? Well, besides the profitable dividends, an investor can also benefit from a diversified portfolio, transparency, liquidity, and performance.
REITs appeared in Hong Kong fifteen years ago, after the business method had been successfully implemented in the US. There are 10 REITs currently available in Hong Kong and investors have many options for commercial businesses to choose from, such as hotels, office buildings or shopping malls.
Hong Kong is similar to other Asian counterparts, such as Malaysia and Singapore, where many investors are attracted by the profitable market and local laws. In fact, Hong Kong is currently in top REITs markets to invest in but you can find fewer REITs here than in Malaysia or Singapore.
Things to look out for beefore investing in REITs
So, if you want to invest in Hong Kong REITs and make a good profit out of it, here are some tips on what to look for in REITs.
- Try to find REITs that have good annualized returns
- Do your research and see if the tenants of the buildings you will invest in through REITs are paying their rent in time or not.
- Make sure the REITs are not in debt and pay dividends in time
Top 5 REITs in Hong Kong
Now let’s see which the best REITs to invest in Hong Kong 2018 are:
Yuexiu REIT is one of the best in Hong Kong and tops the list because it has a great annual return and delivers good income to the investors. For example, if you had invested HK$10,000 in Yuexiu REIT in 2005, it would have turned into more than HK$16,000. If we count dividends in, the sum would go further up to HK$27,000.
Sunlight REIT is the second REIT on this list that has a good annual return and can be a good option for you as an investor. It’s the first REIT in Hong Kong that has exposure not only to the office but also to the retail sector as well. Listed back in 2006, now the REIT owns quite diversified portfolio featuring 16 offices as well as retail properties. It’s a lucrative investment option and if you had started to invest in 2006, an HK$10,000 investment in Sunlight REIT would have turned into HK$21,000 by now. Plus, if we count dividends in, the sum will go up to more than HK$29,000.
As far as market capitalization is concerned, Link REIT is the biggest REIT in Hong Kong and really is a great REIT to invest in. For example, if you had invested HK$10,000 in 2005, your investment would have turned into over HK$67,000 now. If we take in dividends, the sum would go up to over HK$83,000.
Champion REIT is another cool option for the Honk Kong based investors. Operated by Eagle Asset Management, the properties of Champion REIT include a huge complex in downtown which houses headquarters of Industrial & Commercial Bank of China and the Citibank. Some of its other assets include an office block as well as a shopping mall in Kowloon district. Offering a return of about 4.5%, Champion REIT really makes for one of the best investment options around in Hong Kong.
Keppel DC REIT
This is a unique Hong Kong REIT as it actually owns big data centers. The facilities house shared computer networks and infrastructure both locally and in other markets as well. With increasing data consumption on mobile devices around the world, the shares of this REIT are constantly going up as well. Offering more than 5% yield, this is a REIT that investors should definitely look into.
These are some of the best REITs to invest in Hong Kong from the 10 that are currently on the market. And, one great reason why investors should choose REITs as business opportunities is that these real estate investment trusts must have a dividend payout ratio of at least 90%. Believe it or not, investing in REITs in Hong Kong is a profitable move for investors who do not have the necessary amount of money to buy real estate properties, but are interested in this sector and want to achieve a stable income through dividends.