- We believe that a niche group of industrial S-REITs with large exposure to the developed markets of Australia, UK, and Europe have been unjustifiably sold off to below -1 standard deviation levels and could throw some positive surprises.
A deep dive into real global real estate values
Cap rate compression for industrial properties halted in 2Q22.
- - Read this at SGinvestors.io -
- Prior to March 2022, property cap rates for industrial properties globally were compressing steadily, where investors were attracted to its resilient cash flows seen during the COVID-19 pandemic.
- - Read this at SGinvestors.io -
Strong demand-supply fundamentals have supported valuations despite rising cap rates.
- During the initial phase of rising interest rates, transaction evidence, coupled with the continued rise in occupancy and rental rates, meant industrial and logistics properties maintained steady cap rates.
- However, asset yield spreads (spread between property yields vs interest rates) began to narrow and turn negative in some markets, which led to the beginning of cap rate expansions for the industrial and logistics property segments from the beginning of 3Q22.
- Having compressed the most in FY20-FY21, we saw cap rates for industrial properties in some markets expanding at a faster pace than other property types.
Geographically diversified industrial S-REITs have seen weak share prices due to “balance sheet stress”.
- Read more at SGinvestors.io.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-10-12
Read More Analysis On Singapore REITs (S-REITs):
Analyst Reports on Singapore REIT Sector
Check Out Also The Summary Of:
S-REIT Share Price Performance
S-REIT Target Prices & Ratings
