CRES : 2004-011

 

Commercial Mortgage Backed Securitization in Singapore: The Challenges Ahead

 

By

A/P SING Tien Foo

Department of Real Estate

rststf@nus.edu.sg

 

&

 

A/P ONG Seow Eng

Department of Real Estate

rstongse@nus.edu.sg

 

&

 

Prof. NG Kar Hwa

Centre for Financial Engineering

cfehead@nus.edu.sg

 

Centre for Real Estate Studies
Department of Real Estate
School of Design and Environment
National University of Singapore

 

Abstract

The success of Commercial Mortgage Backed Securitization (CMBS) market in the US and the internationalization of CMBS have significant impact on the real estate financing landscape in many Asian markets. Innovative structuring of real estate financing via the CMBS framework has been adopted by real estate investment trusts (REITs) in Singapore. In a mailed questionnaire conducted by this study to evaluate the feasibility of CMBS in Singapore, the results showed that 86% of the respondents were positive on the potential of establishing a CMBS market in Singapore. Banks and finance companies are reluctant to sell the valuable commercial mortgage assets through CMBS because of the current excess liquidity in the market. The fear of disrupting the good relationships with their preferred clients is also another factor that hinders the sale of mortgages by the banks. On the demand side, investors would like to see better supporting services in credit protections, if they were to include CMBS in their portfolio. 83% of the respondents were in favor of setting up a government sponsored secondary mortgage institution (SMI) to jumpstart a sustainable CMBS market.

 

For full paper, download here