Singapore REITs to have staggered recovery in 2021: report

Across sectors, Maybank KimEng sees industrial REITs as the most resilient.

Singapore real estate investment trusts (REITs) lagged in the market recovery year-to-date despite improving fundamentals, according to a report by Maybank KimEng.

“The sector now trades at 290 base points above the SG 10-year, and offers c.9% distribution per unit compound annual gross rate from 2020-22E,” said Maybank KimEng Analyst Chua Su Tye.

Across sectors, the brokerage firm sees industrial REITs as the most resilient, whilst office REITs have pulled back to offer a better risk-reward amidst recovering Grade A REITs.

For industrial, Chua says acquisitions will gain traction in the coming months.

Meanwhile, demand for office space may turn a corner if more staff return to their workplaces, but expects rents will remain flat.

The hospitality sector, amongst the most heavily hit by tightened COVID-19 measures, are artificially supported by government isolation demand, which the brokerage expects to ease by the fourth quarter.

“RevPAR recovery remains slow into 2022. Capital is eyeing long-stay rental housing and purpose-built student accommodation assets, which will figure more significantly in assets under management,” Chua said.