The Development and Performance of REITs in Hong Kong

Abstract

Hong Kong is one of the most dynamic commercial property markets in Asia. With the recent development of REITs in Asia, HK-REITs have become an important property investment vehicle in Hong Kong since 2005. This paper assesses the significance, risk-adjusted performance and portfolio diversification benefits of HK-REITs in a mixed-asset portfolio in Hong Kong over 2005–2008. The impact of the global financial crisis on HK-REITs and the ongoing strategic development of HK-REITs are also assessed. HK-REITs are seen to deliver strong risk-adjusted returns and to have been robust during the GFC with superior risk-adjusted returns to other listed asset classes, but some loss of diversification benefits was also evident in the GFC.