June 22, 2011 / 9:48 AM / 7 years ago

Asia's property IPO market may slow: HSBC

SINGAPORE (Reuters) - Asia’s property IPO market may slow down for the rest of the year as governments move in to cool property prices and equity markets turn sluggish, a senior executive at HSBC said.

“I don’t expect a lot of straight equity to be raised by developers for the remainder of this year if valuations stay where they are,” Jason Kern, managing director and head of real estate and lodging advisory for Asia-Pacific at HSBC, told the Reuters Real Estate and Infrastructure Summit in Singapore.

“I think IPOs for property developers in China for the most part may have to wait until some shift in the regulatory pendulum back at least to a neutral stance from a tightening stance,” he added.

The Asia Pacific REIT (real estate investment trust) sector had a market value of $188 billion as of April, growing nearly three times from $66 billion in 2009, according to industry group Asia Pacific Real Estate Association.

This year, the region saw some large listings with Mapletree Commercial Trust (MACT.SI) in Singapore raising S$898 million and Hong Kong’s Hui Xian REIT (87001.HK) raising 10.48 billion yuan in the first-ever yuan-denominated IPO outside mainland China.

Sharp rises in housing prices have driven governments in Asia to clamp down on the sector, creating uncertainties about the impact of these measures.

Investors are now seeking more liquidity, posing more difficulties for new issues, Kern said.

    “If you are thinking about an IPO, it’s very important to make it as big as possible,” he said.

    If an IPO is too small, then the issuer is not attracting some of the biggest global investors, he said.

    “A lot of global investors tell us that they want to have US$5 million of average daily trade volume, for example, to have enough liquidity to feel comfortable that they can manage their positions and get out when they want to get out,” he said.

    Editing by Vinu Pilakkot

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