Is online retail the hope for Singapore’s weakening REIT sector?

Players believe online shopping will buoy the industry.

After its underwhelming performance in 2Q, Singapore real estate investment trust (REIT) leaders have claimed resiliency, saying the industry is well-positioned to weather the down-cycle.

In a statement, AIMS AMP Capital Industrial REIT CEO Koh Wee Lih said there was a demand from local players despite some multinational companies reducing their space needs in Singapore due to the drop in global commodities.

To recall, REITs registered an overall DPU growth of -0.1% in the previous quarter, with industrial and hospitality sector to blame.

He stressed that the online retail has created opportunities that benefitted the sector.

“Growing trends such as online retail has also created new opportunities for the industrial REIT sector. Whether you buy from Orchard Road or online, the fulfilment is carried out by warehouses so it will benefit the industrial sector, particularly the warehouse and logistics segment,” he said.

Starhill Global REIT Management Ltd. CEO Ho Sing echoed the same sentiment, saying the sector remained strong because of online retail.

“In fact, online shopping has actually helped Singapore retail by educating consumers on new brands overseas, so that ups the game for retail and increases the opportunities where we can push for better shopping experiences and new tenant mix”, he explained.

Meanwhile, Keppel REIT Management CEO Ng Hsueh Ling, noted that increasing compliance remains a challenge and that the industry should be differentiated from financial institutions.

“I hope we maintain a good regulatory and compliance environment for attracting global capital into S-REITs. It is not so easy to build a REIT market, and Singapore has an edge in providing a market which investors easily understand and can feel safe to invest," she claimed.