- Tides are turning on lower rates, with S-REITs poised to undergo a period of gradual DPU growth recovery amidst less pressure on borrowing costs and an improvement in liquidity.
- The quality of S-REITs’ portfolios is dependent, in part, on their exposure to real estate for the future, as the built environment needs to evolve in response to secular megatrends such as technological disruptions and a growing emphasis on ESG to stay relevant.
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Declining rates and expectations of a soft landing bolster our positive view on the S-REITs sector
- The S-REITs sector has underperformed both the Straits Times Index (STI) and the MSCI Singapore Index since the start of 2020 till the time of writing, bludgeoned by the pandemic, sticky inflation, and elevated interest rates. However, we have good reason to believe that the sector is at a long-awaited turning point.
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- Easing inflation trends and a softening US labour market are setting the stage for the Fed to start cutting rates by 25bps each in Sep and Dec. The global economy has been broadly resilient and appears poised for a soft landing. Amidst this backdrop, we think S-REITs are positioned to outperform.
3 key themes that shape the outlook of S-REITs
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