What should investors expect from Singapore REITs as Q3 results roll in?

It’s still premature to turn positive on developer stocks.

It will soon payout time for REITs as the Q3 results season rolls in. Now, analysts are weighing in on what investors should expect from the country’s real estate giants.

According to Barclays and DBS, retail is still likely to see the highest earnings growth on new malls and makeovers, and retail REITs remain resilient despite headwinds for the sector such as deteriorating retail sales and shoppers traffic data.

Office REITs are also expected to do well, thanks to positive leasing momentum brought about by the supply crunch.

“Office and industrial REITs saw the most M&A activity. We expect developers to be mixed, with retail supporting CAPL and Singapore residential dragging. Developer stocks have underperformed the STI by 3% and the SREIT Index by 7% YTD. We still think it is premature to turn positive on developer stocks given the expected deterioration of Singapore residential fundamentals towards the end of 2015,” noted Barclays.

“Industrial REITs are expected to continue reporting a more moderate positive rental reversions to the tune of 10-12% as expiring rents catch up with market levels which has remained stagnant since last year. Retention rates will be a focus for industrial landlords amongst a deluge of competitive supply and (iv) For hospitality S-REITs, we expect a seasonal pick-up in volumes and occupancies in 3Q14 but remain cautious on a convincing turnaround in visitor arrivals and guidance for corporate RFP rates guidance for 2015,” stated DBS.