Investment Insights

Growing Real Asset Opportunities
in Asia Pacific ex Japan

14 July, 2020

Underpinned by a structural shift in demographics, the number of listed infrastructure related stocks have seen remarkable growth over the last decade. Areas which have experienced this development include Real Estate Investment Trusts (REIT), Transport and Utilities.

Over the last 20 years, the REITs market in Singapore and Hong Kong has grown from zero to be one of the largest and most established globally. The first Singapore-REIT (S-REIT), CapitaLand Mall Trust, was listed on the Singapore Stock Exchange in 2002 with a market capitalization of S$708 million. Now, more than 17 years later, there are a total of 44 S-REITs and Property Trusts with a total market capitalization of about S$98 billion as of 30 June 20201. More REITs can be expected from Emerging Asia going forward. India launched its first REIT last year, while The Philippines is due to launch its first REIT this year. China has announced plans to start listing infrastructure REITs.

Asset recycling from governments have also contributed to this asset expansion. In March this year, the New South Wales (NSW) government announced it was exploring to sell the remaining 49% stake in Sydney motorway WESTCONNEX2. The authority had already sold 51% of the motorway to Transurban for AUD9.3 billion in 20183. NSW Treasurer Perrottet said that, the government would channel the proceeds to build more schools, hospitals as well as road and rail networks.

Gradual dilution of the government’s equity ownership in state owned enterprises have also enlarged the listed infrastructure space in Asia. In India, the government's equity stake in pure-play hydro power operator National Hydroelectric Power Corporation (NHPC) has been reduced from over 85% in March 2015 to just over 70% in March 2020 while institutional investor ownership increased from 6.2% to 18.8% over the same period4.

This combination of sector growth, government asset recycling and state ownership dilution has resulted in the Asia Pacific ex Japan listed infrastructure opportunity set expanding meaningfully from 2010 to 2019 (Chart). 

CHART 1: Asset Expansion Creates New Opportunities

Chart 1 Source: Martin Currie Australia, FactSet, as of 31 March 2020. FactSet data as of 30 June 2019. Data shown for illustrative purposes only. Past performance is not a guide to future returns. Utilities refer to MSCI All Countries Asia Pacific ex Japan Utilities Index. REITs refer to S&P Asia Pacific ex Japan REIT Index. Transport refers to MSCI All Countries Asia Pacific ex Japan Transport Index. 

The bottom line

The Asia Pacific region is set to dominate global infrastructure spend over the next few decades, with the region accounting for over 50% of the global infrastructure investment needs to 20405. In tandem, investors will see growth of the opportunity set in Asia being driven by asset recycling by governments, new public offerings across sectors and divestment of state linked companies. This evolution will further diversify the geographic and sector choice of investors into Asia Pacific ex Japan infrastructure. 

Additional notes:

1 Chartbook: SREITs & Property Trusts, June 2020

2 NSW Government Media Release, NSW Government announces scoping study into options for residual stake in WESTCONNEX, 6 March 2020.

3 Transurban, 2019 Investor Day Presentation. 29 April 2019.

4 NHPC Limited, Company Website. Data as of 31 March 2020.

5 Global Infrastructure Hub, Oxford Economics, July 2017.


The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase or sell securities, and the information provided regarding such individual securities is not a sufficient basis upon which to make an investment decision.

Source: Legg Mason and Martin Currie. Data and estimates as at  30 June 2020 unless otherwise stated. 


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