Ascendas REIT's next phase: A player in Singapore's Smart Nation initiative

SINGAPORE (May 7): Few real estate investment trust managers have spoken extensively about the use of technology in their properties. William Tay, the new CEO of Ascendas REIT’s manager, emphasised that PropTech was among his priorities when he met analysts and the media on April 23 at its year-end results briefing. Ascendas REIT is Singapore’s largest REIT by assets under management (AUM) and market cap, and it is encouraging that Tay is able to link being a player in Singapore’s Smart Nation initiative back to distributions to unitholders. Only a handful of REITs have articulated that they are committed to smart, green buildings. This is because of the costs associated with upgrading buildings either through redevelopment or asset enhancement initiatives (AEIs).

In general, the REITs sponsored by the Ascendas-Singbridge Group, Mapletree Investments and, of course, CapitaLand, are at the forefront of this effort. But REITs need to have a very long-term view to future-proof their buildings. The benefits of future-proofing space are unlikely to be felt in the near term or maybe even the medium term.

But REITs should not continue with the old strategy of acquiring, including giving upside targets for AUM, because this implies short-termism, especially if the REIT is unable to upgrade its buildings to be smart and green. In recent months, a REIT has bought old buildings that need upgrading from its sponsor.

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