These three REITs will be most vulnerable as office rents dip

Can they survive the downturn?

Gone are the days when office landlords had the upper hand when it comes to negotiating rents. Singapore’s Central Business District (CBD) will welcome a slew of new office completions in coming quarters, and rents are expected to fall as this massive supply enters the market.

According to a report by Moody's, three large REITs will be most affected by as rents head south. These REITs are CapitaLand Commercial Trust, Keppel REIT and OUE Commercial Real Estate Investment Trust.

These REITs are the most exposed to the lower demand and higher supply levels for office space in the CBD because two-thirds of their portfolio comprise CBD office space.

Nevertheless, Moody’s said that these three S-REITs will benefit from their track record of active lease management and portfolio of quality assets, because tenants tend to choose quality assets when rental rates fall.