Singapore REITs - DBS Research 2022-12-15: The Time Is NOW

Singapore REITs - The Time Is NOW

Singapore REITs - DBS Group Research  | SGinvestors.ioMAPLETREE PANASIA COM TRUST (SGX:N2IU)
  • Singapore’s real estate sector to grow modestly as economy enters a soft patch.
  • S-REITs have ample defenses against sustained interest rates hikes till the tide turns in late 2023.
  • Re-opening story “not dead”, many beneficiaries from re-opening of China’s economy and borders.
  • S-REIT yield spread of ~3.0% has priced in interest rates risk; selective picks with a preference for resilience and balance sheet strength.

Singapore economy to enter a soft patch; real estate sector to see slowing growth momentum.

  • Singapore’s economy is expected to slow to ~2.2% in 2023, averting a recession while inflation is expected to remain sticky at ~6.3%. With this backdrop, DBS economist expects more cautious business and consumer sentiment. Thus, we believe Singapore’s real estate cycle will enter a more modest growth phase, but we still project most sectors to see market rents remaining on an uptrend in 2023.

S-REITs to navigate interest rates and currency headwinds well.

  • While we project overall net property income (NPI) growth of ~5.0% over FY22-24F, we see more flattish DPU growth rates of ~3.0% (-0.5% if we exclude hospitality S-REITs), mainly due to the impact of higher refinancing rates and forex losses for selected S-REITs.
  • That said, we see ample defenses from S-REITs’ high fixed-rate debt ratio and forward currency hedges until interest rates turn in S-REITs favour, which could be sometime in late 2023-2024.

Re-opening story is “not dead”.

FED ends hikes by 1Q23, major overhang to be lifted.

Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Rachel TAN DBS Group Research | Derek TAN DBS Research | Dale LAI DBS Research | 2022-12-15

More views on outlook of Singapore REIT (S-REIT) sector:
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