Chart of the Day: Trouble is brewing for SREITs as rental outlook dims

Demand is slowing across all key sectors.

If strong rents are the bulwark of good REITs, then trouble is brewing for Singapore REITs due to dimming rental outlook across all key sectors. 

According to OCBC, muted demand growth and oversupply issues mean that REIT managers are grappling with an increasingly challenging operating environment

“Fundamental headwinds facing each subsector include slowing demand as well as over-supply concerns. We note that REIT managers in sub-sectors facing more severe supply pressures are offering more competitive rates to maintain their occupancy levels, particularly in the industrial space. Looking ahead, as the gap between the portfolio passing rents of SREITs and market rents narrows, this would result in less positive or subsequently even negative rental reversions,” OCBC said.