From REITs to Direct Deals: Scaling Your Real Estate Investments in Southeast Asia
Real Estate Investment Trust (REIT) has long been the gateway for investors who want to have an exposure to property markets without the hassles of direct management. For many, they are a very good place to start. However, for accredited investors and high net worth individuals, REITs are not the finish line but a starting line.
Scaling up your real estate portfolio to its full potential requires a shift from REITs to direct deals - from being a passive shareholder to an active player in the region's most compelling growth stories. This journey opens doors to higher returns, greater control, and actual portfolio diversification that is just not possible with publicly traded REITs.
This guide is the strategic pathway for expanding your real estate investments across Southeast Asia from your first REIT direct investment to invest directly in exclusive private real estate investment funds.
The REIT Foundation: A Solid, But Limited, Starting Point
Understanding REITs is crucial, as they form the foundational knowledge for any real estate investor.
Are REITs a good way to invest in real estate?
Yes, for beginners and for core portfolio stability. REITs offer immediate diversification, high liquidity and mandatory dividend payouts. They are an effective way to get broad exposure to the real estate sector without the need for much capital or knowledge.
What is the 90% REIT rule?
This is a basic requirement for a company to qualify as a REIT. It has to distribute at least 90% of taxable income as dividends to shareholders. This ensures great yield but also reduces the amount of capital the trust can reinvest towards growth.
What is the dark side of REITs?
While beneficial, REITs have significant limitations for scaling investors:
High Correlation to Stock Markets: REIT prices often move with the broader equity market, diminishing their diversification benefits during a crash.
Limited Upside: You benefit from dividends but miss out on the full capital appreciation of direct ownership.
No Control: You have zero say in asset selection, management, or exit timing.
Management Fees: You pay for management regardless of performance.
REITs are like taking a bus - it gets you to the general destination efficiently. Direct deals are like driving your own car - you control the route, stops and final destination.
The Scaling Pathway: From Passive to Active Real Estate Investing
Moving beyond REITs is a strategic evolution. Here’s the typical progression for sophisticated investors:
Stage 1: Enhanced Public Market Strategies
Before going fully private, some investors explore more tactical (in terms of investment opportunities) public market approaches such as investing in specific real estate investment trust companies with focused strategies or undervalued assets. This is a half-step between passive REIT funds and the actual direct deals.
Stage 2: Private Real Estate Debt Funds
This is often the first step into the private markets. Instead of owning property, you become the lender.
What it is: Pooling capital to provide loans for real estate developments or acquisitions.
Why it's compelling: It offers priority in the capital stack, potentially secured returns (8-12% p.a.), and lower correlation to property values compared to equity holdings.
Example: A private real estate investment fund that lends to mid-market residential developers in Vietnam.
Stage 3: Direct Equity Deals & Co-Investment
This is where you transition from lender to owner, participating directly in the property's equity.
What it is: Taking a direct ownership stake in a specific asset, such as a commercial building, logistics warehouse, or residential development.
Why it's compelling: It offers full alignment with the asset's performance, control over major decisions, and capture of 100% of the capital appreciation.
Example: A REIT direct investment model, but for a single, private asset—like a boutique hotel in Thailand or a tech-focused office building in Singapore.
Stage 4: Development Projects
The final stage of scaling involves funding projects from the ground up.
What it is: Capitalizing the construction of new real estate assets.
Why it's compelling: It offers the highest potential returns, as you are compensated for taking on development risk.
Example: Investing in a real estate fund focused on building data centers in Indonesia to serve the region's digital economy.
Why Southeast Asia? The Compelling Regional Thesis
Scaling into direct deals is particularly powerful in the ASEAN region due to:
Rapid Urbanization: Creating sustained demand for residential, commercial, and industrial space.
Infrastructure Growth: New ports, roads, and digital infrastructure boosting property values.
Rising Middle Class: Driving consumption and demand for retail, logistics, and upgraded housing.
Favorable Demographics: A young, growing population compared to mature Western markets.
How to invest in REITs step by step?
Open a brokerage account with a platform that offers access to Singapore and other Asian stock exchanges.
Research: Analyze different REITs by sector (retail, office, industrial, healthcare).
Evaluate: Look at metrics like Dividend Yield, Price-to-Book Value, and Debt-to-Asset ratios.
Execute: Purchase shares through your brokerage.
(This process highlights the simplicity of REITs compared to the complex due diligence required for direct deals.)
Conclusion: Your Blueprint for Real Estate Mastery
The journey from REITs to direct deals is the defining path of a sophisticated real estate investor. It’s a move from being a passive spectator to an active architect of your wealth, leveraging the unparalleled growth dynamics of Southeast Asia.
This transition, however, requires more than capital. It demands access to vetted deal flow, deep regional expertise, and rigorous due diligence capabilities.
Ready to scale your real estate portfolio beyond the public markets?
Ascendant Globalcredit Group provides access to accredited investors with exclusive access to curated private real estate debt and equity opportunities across Southeast Asia.
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As of 2025, the largest REIT in Asia by market capitalization is often a Singapore-based entity, such as CapitaLand Integrated Commercial Trust, reflecting Singapore's mature and robust REIT market. However, size does not always equate to the best performance or opportunity for direct deal access.
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A common rule of thumb for a diversified portfolio is to allocate 5-15% of one's total portfolio to real estate. For most retail investors, this would be entirely in REITs. For accredited investors scaling up, this allocation would be split, with a growing percentage dedicated to private real estate investment funds and direct deals.
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A real estate fund example in the private market could be "The ASEAN Logistics Value-Add Fund," which would pool capital from accredited investors to acquire, renovate, and manage a portfolio of warehouses across Thailand, Vietnam, and Malaysia, aiming to sell them after 5-7 years for a significant profit.
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Open a brokerage account with a platform that offers access to Singapore and other Asian stock exchanges.
Research: Analyze different REITs by sector (retail, office, industrial, healthcare).
Evaluate: Look at metrics like Dividend Yield, Price-to-Book Value, and Debt-to-Asset ratios.
Execute: Purchase shares through your brokerage.
(This process highlights the simplicity of REITs compared to the complex due diligence required for direct deals.)