The Securities and Exchange Commission approved Ayala Land REIT (AREIT), the first-ever REIT (Real Estate Investment Trust) in the Philippines. AREIT Initial Public Offering started last July 27 to August 3, 2020 (through PSE EASy) and July 24 to 30 through online broker. Many investors bought shares during the IPO of the first REIT on the market.
Learn more about what is REIT here: “How to Invest REITs in the Philippines?”
AREIT IPO price was reduced from P30.05 to P27. Listing in the PSE was on August 13, 2020. Did you buy shares on the IPO, or did you wait for it to be available for trading?
Admittedly, there are some mixed opinions from investors about Ayala Land REIT IPO. Nonetheless, we laid out the benefits and risks of investing in AREIT.
Top 5 Reasons Why You Should Invest in Ayala Land REIT:
- Regular Income
- Zero Contract
- Upside Potential
- Beat Low-Interest Rates
1. Regular Income
The number one reason why you must invest in AREIT is the ability to generate regular income. REITs are attractive assets because you will earn money by receiving regular cash dividends. After all, 90% of REITs taxable earnings are required to be given to shareholders, and income of REITs are exempt from 30% corporate tax.
AREIT is a subsidiary of Ayala Land, one of the largest property developers in the Philippines. Ayala Land continuous to develop high-end residential, shopping centers, offices, hotels, and resorts. It is a very stable company with a strong balance sheet. With Ayala Land’s solid track record, we’re confident AREIT would follow a robust performance.
3. Zero Contract
Unlike buying a real estate property, investors often have to go through contracts and pay a monthly mortgage. Securing loans to purchase real estate properties requires plenty of effort and many documentations. Investing in REITs requires minimal effort as you can buy and sell your shares online, provided you have an online trading account. Most importantly, it doesn’t require a contract.
4. Upside Potential
Like other assets in the property sector, REITs have more upside potential, especially now that the covid19 pandemic has caused many real estate companies’ stocks to fall. The property sector is always a resilient business. They still have a long-term positive outlook. This crisis is a big opportunity for long term investors to buy during dips.
5. Beat Low-Interest Rates
Yes, investing in stocks and assets like REITs could beat inflation and beat low-interest rates you would earn from bonds and time deposits. While you receive from regular dividends payout, you will also have the potential to gain more when the value of the REITs grow in the market.
What are the Risks Involved When Investing AREIT?
Of course, all investments have risks. AREIT is not an exemption. Below are the risks of investing in Ayala Land REIT.
- Economic Slowdown
- Low Rent Income
- Market Volatility
- Bad News
When our economy grows slowly, when GDP is low, and when government earnings are less than spending, investors become less confident to invest in the Philippines. That could create less volume of trades, could diminish market capitalization, and could also slow down the growth of the stock price.
Low Rent Income
Because REITs rely more on rental income, low rents and leases can affect the company’s earnings badly. When the company doesn’t meet earnings expectations, investors would be disappointed. It affects more many things negatively.
Any asset traded in the stock exchange is affected by market volatility. It can either be local or global. Whatever happens in the local economy could affect the stock market—the same way with what’s happening outside the country. Stocks could go up or down.
Although it could happen in a century or many decades, a pandemic is a huge risk. So invest only what you are comfortable to lose.
Bad news is another factor that could hurt the price of stocks and other investments traded in the stock market. Whether you are a short term or long term trader, it helps to be updated so that you can enter or exit with some nice profit.
Should I Invest in Ayala Land REIT or Not?
I have always admired Ayala Land, and I honestly can say that the only stocks from my portfolio which recovered faster during covid19 were ALI and SM. The rest were slowly mending.
I’m glad to invest in AREIT, too. It’s the first REIT in PH and looks like the FOMO will linger in the market until more REITs will be listed.
I like recurring income and I like REITs and the ability to earn from dividends. I have a few shares from a well-known German REIT that has not yet reached its all-time high, but I don’t mind. REITs are reliable businesses but if you can’t take short term risks, it’s not for you. I think your outlook with REIT works best for long term.
Trading actively with AREIT requires trading skills capturing the right momentum.
Other Investing Guides:
- Top 25 US Stocks to Invest in 2021
- Top Companies in the NASDAQ 100 Index
- Why You Should Invest Microsoft Stocks
Disclosure: I’m a long term investor of Ayala Land, Inc. (parent company of AREIT). I wrote this article myself, and it expresses my own opinion. This content is for information purposes only and should never be considered as professional advice. Every investor has different risk tolerance and goals. Always do your own research. All investments have risks. Risk only the money you’re not afraid to lose.
20 thoughts on “Top 5 Reasons Why You Should Invest in Ayala Land REIT (AREIT)”
Hi how to invest if you in abroad???
When I sell some of my areit how are charges computed. When I sell how are taxes computed Your advice will be greatly appreciated.
How to invest?
Ayala Land REIT is available to invest using most online trading platforms in the Philippines
How to invest po sa AREIT. I am interested but I don’t know where to go and whom I register or paid to. I need and instructions or guide on how to enter for AREIT. and wan to learn more.
Hi Merced, you need to open an online trading account to invest in AREIT. Open BDO Securities (if you are a BDO client). Open First Metro Sec account (if you’re a Metrobank client). BPI Trade if you’re a BPI client. Or open COL Financial (it accepts most banks).
Hi, I’m interested in Areit, however the COL financial doesnt accept new applicant as of now, first metrosec only accept metrobank holder too. What are the other trading platform so we can invest in Areit?
Hi, I will make a post about it here in the next few days 🙂
What trading platform you using?
Hi 🙂 For PH stocks, I’m using COL Financial, MetroSec Pro, and BDO. For international stocks, I’m using etoro
Is AREIT available now? because I heard that it will be available today until August 3, 2020 and where can i buy some shares?
Yes, it’s available now for IPO subscription through your online broker and PSE EASy. If you log in to your online trading account, you’ll see an IPO notice. You can subscribe for some shares using that link. We can trade AREIT by August 13.
Can you give your reason on why you won’t be buying AREIT during the IPO?
Hi Romeo 🙂 I won’t be buying during the IPO because of the economic situation right now. For two consecutive quarters, many businesses might not meet their earnings expectations, PH did not yet achieve the flat curve of covid cases, and around 100 days to go before US election. Those factors could affect stock prices go down so I’m gonna look for an entry lower than P27. Just my opinion as always 🙂
Thanks for this!
How often do share prices go below its IPO offer? I missed MM but plan to buy AREIT IPO.
Very often 🙂 AREIT went down below its IPO price already. It has triggered my “buy” alert
Hi, how to invest this? and is it okay to invest this pandemic? thank you
YES 100% KASI MABABA PA AFTER THE PANDEMIC TATAAAS NA SO NOW IS THE TIME TO INVEST IN REIT.