S'pore retail investors to get expert tips on Reits as the asset class comes back into play
The programme is supported by SGX Group, Reit Association of Singapore and the Securities Association of Singapore. PHOTO: LIANHE ZAOBAO
S'pore retail investors to get expert tips on Reits as the asset class comes back into play
SINGAPORE – Retail investors can get expert tips on real estate investment trusts as the market for Reits in Singapore heats up with falling interest rates and fresh listings on the horizon.
Research analysts, trading representatives and Reit managers will hold 10 sessions under a newly launched educational series on the asset class aimed at enabling retail investors to better understand and assess the risks involved before putting their money into Reits.
More than 300 investors, brokers and investment professionals will get to visit Reit properties and understand the assets that they invest in under the six-month programme, which is organised by the Securities Investors Association (Singapore), or Sias.
Mr David Gerald, president of Sias, said on May 24: 'Going beyond reading annual reports or attending webinars, investors will now walk through the actual assets, engage the managers, ask questions and understand the fundamentals as part of investor education. Investors will need to understand and assess the risks involved as well when investing in Reits.'
The programme is supported by SGX Group, Reit Association of Singapore and the Securities Association of Singapore.
Head of equities at SGX Group Ng Yao Loong said SGX sees a healthy Reit IPO pipeline, particularly in emerging sub-sectors like data centres, purpose-built living spaces and logistics assets.
Speaking at a Reits symposium on May 24, he noted that the Singapore bourse has emerged as the third-largest Reit listing venue globally by fund-raising, after China and India, in the last five years, adding that SGX is making efforts to ensure that Singapore remains the listing venue of choice for Reits globally.
Japan's Nippon Telegraph and Telephone in its earnings release in May said it plans to list its data centre Reit on the SGX in the future. Singapore's Centurion said in a January filing that it is exploring the establishment of a Reit involving some of its workers and student accommodation assets. If the plan materialises, the Reit will be listed on the mainboard of the SGX.
Mr Ng also introduced InvestSG, a platform where Reit investors can find sector insights, research, community discussions, market data and model portfolios on Reits, enabling smarter investment portfolio decisions. The platform is slated to be launched in the later part of 2025.
Reits are funds that invest in a portfolio of income-generating real estate assets such as shopping malls, offices and hotels. They often take on some debt to buy assets and are subject to an overcall cap on gearing in Singapore. Similar to stocks, Reits are listed on stock exchanges, allowing investors to buy and sell units.
With interest rates trending downwards, Reits are expected to benefit in 2025 as borrowing costs decline and investor appetite for income-generating assets grows.
RHB Bank analyst Vijay Natarajan in a May 20 report noted that most of the 15 Singapore Reits, or S-Reits, under the bank's coverage reported in-line results for the first quarter, driven by softer interest cost pressures.
He said the sharp fall in domestic rates is benefiting the S-Reits, with the majority of them reporting lower overall interest costs.
The fall in benchmark rates has also resulted in lower yields for alternative options such as deposit rates, T-bills and Singapore savings bonds, and rising yield spreads for S-Reits – potentially creating room for fund inflows to the sector if the tariff overhang is removed, he added.
Mr Ng said Reits stand out as an alternative asset class in times of market volatility, as they exhibit a lower correlation with macro uncertainties as compared to equities and other asset classes.
'As a sector, it is currently trading at a cyclically low valuation of 0.8 time P/B (price-to-book), or around a 20 per cent discount, while offering a forward dividend yield of around 6 per cent,' he said.
A P/B ratio of 0.8 time for Reits indicates that the market price of the Reit is 80 per cent of its book value, suggesting that the Reit is trading at a discount to its underlying asset value.
He added that Reits not only offer passive rental income, but also exposure to trends such as return-to-office mandates, the rise of artificial intelligence, and evolving consumption patterns.
Mr Natarajan of RHB Bank said the direct impact of US tariff policies have been minimal on S-Reits so far, and favours the industrial, office, healthcare, and suburban retail sectors. Hospitality remains his least preferred sector.
UOB Kay Hian analyst Jonathan Koh added that several S-Reits, including Frasers Centrepoint Trust, Keppel Reit and CapitaLand Integrated Commercial Trust, reported positive rental reversion, or a positive change in rental rates.
'Singapore is a safe haven due to fiscal discipline and its lowest reciprocal tariff of 10 per cent,' he said.
He noted that a favourable rate environment, with a 10-year government bond yield of 2.6 per cent and a three-month compounded Singapore Overnight Rate Average, or Sora, at 2.3 per cent, has helped to boost the attractiveness of Reits, which are now offering yields of 6-7 per cent.
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