SPOTLIGHT 5

Peter Mitchell is currently the Chief Executive Officer of the Asia Pacific Real Estate Association (APREA).

APREA is a non-profit trade association which represents and promotes the real estate asset class in the Asia Pacific region. It is headquartered in Singapore and with member chapters and country boards in Japan, Hong Kong, India, the Philippines, China, South Korea, Malaysia, Singapore and Australia. Members come from real estate companies, REITs, private funds, institutional investors and investment banks, amongst others.

Peter holds degrees in economics and law. He has lived in Singapore for 12 years.

Property Quotient (PQ) interviewed him recently to gain insights on what APREA can offer to promote Malaysian real estate and the regional property outlook as well as how REIT will influence the commercial property market, especially office subsector.

PQ: One of APREA’s mandate is to represent and promote the Asia Pacific real estate asset class. How has APREA progressed to further enhance this mandate in Malaysia?

Peter Mitchell (PM): APREA has done a number of things that are beneficial to Malaysia, for example: (1) we produce a number of regular research reports that focus on the performance of the various REIT markets in Asia, including Malaysia. We have also produced a report on the performance of Asian real estate which includes an analysis of Malaysia. These reports present the performance of Malaysian in a good light relative to other

markets; (2) we have instituted a Malaysia-REIT corporate governance index. It is now in its second year and it rates REITs based on a corporate governance criteria and weightings; (3) we have established a Malaysian member chapter, the purpose of which is to enable local issues to be better identified and for the Malaysian membership to arrange its own affairs and activities; (4) we have made a number of introductions to Malaysian members who have sought assistance in overseas business development trips.

PQ: According to Lim Swe Guan, the Chairman of APREA, “The Asia Pacific is expected to resume its above par growth and interest in regional real estate will return”. Can you comment on the market projection for the rest of this year compared with last year? Is it going to be relatively stagnant in some key markets i.e Australia, Japan, Singapore etc?

PM: This is obviously difficult. The major risk to continued strong performance in Asia Pacific is the anemic rate of recovery in the US and the continuing uncertainty in Europe. Subject to these external forces, in the public markets we can expect to see more IPOs and other capital raisings, in Malaysia, Singapore and Japan. We may also see some further activity in Thailand with the new REIT law there and we may also see the Philippines REIT law become operative, in which case we’ll see at least 3 REITs launched there very quickly.

In the direct markets, the last APREA/Real Capital Analytics Asia Pacific Transactions Report confirms a fall-off in transactions recently. However, the trend remains definitely upward since early 2009 and transactions continue to be dominated by local players. Despite the macroeconomic uncertainty, the continued strong growth rates in Asian economies and predominance of local players suggest that anything like “stagnancy” in real estate transactions across the region is highly unlikely.

PQ: In your opinion, what is the best practice/ main component in corporate governance that M-REIT should focus to attract more international institutional investors to Malaysia?

PM: The corporate governance issues of particular importance to institutional investors are things like a REIT’s approach to related party transactions, independence of board members, transparency and alignment of manage-

ment and unit holder interests and quality of disclosure. Regarding the latter, one just has to look at what is going on in Hong Kong at the moment with management of some of the companies currently under the spotlight to understand what investors will not tolerate.

PQ: To what extent do you think that the growing REIT market in Malaysia will influence the commercial property market especially office subsector?

PM: I think there is no doubt that there will be influence. The experience of other markets is that REITs are agents of change (for the better), in that they promote and encourage higher standards, higher levels of transparency and disclosure and thereby lead to both lower cost of capital and greater investor confidence. To me a classic example of this is valuation standards in Singapore, where the approach to valuation has altered greatly as a result of the advent of REITs.

PQ: As a closing statement, what is the outlook for real estate equity and debt market in Asia Pacific for second half of this year?

PM: It is hard to predict because of the level of uncertainty in the US and Europe. It seems that private equity capital raising is going to continue to be difficult, but as against that we can expect a lot of activity in the public markets.

For more information about Asia Pacific Real Estate Association (APREA), please visit http://www.aprea.asia/

by Hazrul Izwan

MACROECONOMICUNCERTAINTY

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Peter MitchellCEO, APREA

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