Hospitality REITs win big as tourists cash in on weak SGD

Chinese, Indonesian arrivals are on an uptrend.

Hoteliers across the city-state may start seeing more tourists as the Singapore dollar weakens against regional currencies, according to a report by UOB Kay Hian.

“Hospitality REITS could benefit from recovery in tourist arrivals. Prospects of a weakening SGD should bode well for the local hospitality scene as it becomes cheaper for overseas visitors to come and spend in Singapore,” UOB Kay Hian said in a report.

Hotel landlords will also benefit from the resurgence in the number Chinese and Indonesian visitors, which make up bulk of overall tourist arrivals.

However, UOB Kay Hian cautioned that the weak SGD might also negatively impact the returns of locally-listed REITs, particularly those which derive bulk of their income in Singapore.

“A weaker SGD could affect S-REITs as the currency weakness bites into the returns, resulting in less capital inflow into the sector. This is the opposite of the positive impact of an appreciating SGD in the past as the currency appreciation enhanced the returns. So, the domestic S-REITs will be more affected compared to those that derive value from overseas,” said the report.