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Singapore-listed real estate investment trusts (S-REITs) are expected to perform well this year after a challenging 2023. RHB said improving economic conditions and the Federal Reserve’s expected rate cuts will drive their outperformance.
DBS predicts Singapore’s tourism recovery will drive strong performance of retail S-REITs next year
RHB Equity Analyst Vijay Natarajan expects the Fed to start cutting its benchmark interest rate in the second half of this year.
The development is seen as a positive catalyst for Singapore REITs. Natarajan also highlighted Singapore’s strong economic growth forecast, noting that Singapore REITs, especially those focused on office and hotel assets, are expected to stage a strong recovery this year as they can take advantage of improving market conditions.
“We continue to recommend investors add a balanced portfolio of industrial REITs for stable yields amid market corrections, as well as a portfolio of office, hotel and retail REITs to ride the recovery and rebound after the interest rate cycle turns,” he explained.
The next big rally in Singapore REITs is expected to start in the second quarter following the US Federal Reserve’s cut in policy rates. Institutional investors are also expected to re-enter the Singapore REIT market after a cautious period over the past two years. This will influence the sector’s recovery later this year.
Natarajan predicts that Singapore REITs across sectors are likely to step up acquisition activities in the second half of 2024 due to lower borrowing costs. In line with these positive forecasts, RHB maintains its “overweight” rating on Singapore REITs and names CapitaLand Ascendas REIT, Keppel REIT, AIMS APAC REIT and CDL Hospitality Trusts as top picks.
More information about OMY: Best Real Estate Investment Trust (REITS) in Singapore
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