The Singapore Exchange (SGX) announced today that it is pioneering Asia’s first international real estate investment trust (REIT) futures based on indices tracking diverse REITs listed in Singapore, Hong Kong, Malaysia and Thailand.

This comes on the back of rising global investor demand for real estate related investment products and trading solutions. 

In a Tuesday (August 4) release, SGX announced it will launch the SGX FTSE EPRA Nareit Asia ex-Japan Index Futures and the SGX iEdge S-REIT Leaders Index Futures on August 24.

The FTSE EPRA Nareit Global Real Estate Index series is a widely followed global benchmark, with an estimated US$340 billion ($467.91 billion) of assets under management actively benchmarked or passively tracking the indices. 

Meanwhile, the iEdge S-REIT Leaders Index is the most liquid index-basket representation of the Singapore REIT (SREIT) market and one of the most widely referenced in SGX’s suite of indices. Both futures are designed in accordance with Commodity Futures Trading Commission guidelines, which would allow broad distribution to the US and global institutional investors. 

SGX said the listing of the SGX FTSE EPRA Nareit Asia ex-Japan Index Futures and the SGX iEdge S-REIT Leaders Index Futures builds on the forte of the Singapore stock market, following the launch of Singapore Single Stock Futures in June this year. 

Recent years have seen alignment in REIT performances globally, buoyed by rising investor interest. 

Singapore is the largest REIT market in Asia ex-Japan, with 44 REITs and property trusts which have a combined market capitalisation of $98 billion. The market capitalisation of SREITs and property trusts has grown at a compounded annual growth rate of 15% in the last 10 years.

Michael Syn, Head of Equities at SGX, said, “Singapore is the REITs growth capital of Asia, attracting global institutional investors looking for defensive returns, particularly in today’s volatile markets and low-interest rate environment.”

Compared to other asset classes, REITs offer one of the highest dividend yields and lower volatility, with an average dividend yield of 7.1%.