How could the new iEdge Singapore Next 50 Indices reshape valuations, visibility, and investor opportunities.
Hosted by Michelle Martin, this episode dives into how the Next 50 indices could unlock liquidity, ETF flows, and future growth for S-REITs within a context of falling rates.
REIT specialist and Wealth Advisory Director, Kenny Loh breaks down the impact of falling borrowing costs and where income-focused investors should be looking now.
From Centurion Accommodation REIT’s IPO to data centres, retail, and healthcare REITs - find out which sub-sectors are set to shine.
Kenny: S-REITs represent 16 of the 50 constituents, accounting for around 44% of the iEdge Singapore Next 50 Index by weight. This prominence reflects their importance in Singapore’s market, their stable business model, and strong investor demand for defensive, income-generating assets. It also underscores Singapore’s reputation as Asia’s REIT hub, with mid-cap S-REITs fitting the liquidity and capitalization criteria for index inclusion.
Kenny: Index inclusion usually improves liquidity and valuation due to greater visibility, eligibility for index-linked ETFs, and capital inflows from passive and institutional investors seeking diversified mid-cap exposure. Historically, such inclusion has drawn capital from both retail and institutional investors, as it provides new exposure with lower correlation to the STI.
Kenny: With significant overlap, positive re-rating and flows into the new indices could spill over into the broader S-REIT index, supporting prices and narrowing performance gaps. Increased investor attention and fund inflows often enhance sentiment across the sector. For REIT managers, index inclusion creates measurable targets, motivating better engagement, transparency, and accountability.
Kenny: It’s highly likely that new ETFs or index funds will follow. The benefits include diversification, reduced single-stock risk, and easy access for retail investors. Risks include management fees, high REIT concentration, and vulnerability if interest rate cycles or the economy turn adverse. In downturns, blue-chip REITs tend to hold up better than smaller or mid-cap names.
Kenny: Historically, the iEdge Singapore Next 50 delivered ~5% annual returns over 10 years, lower than the S-REIT and FTSE ST REIT indices which typically outperform due to their blue-chip focus. However, year-to-date 2025, the Next 50 has outperformed the STI (25% vs 19%), driven largely by REIT strength in a falling rate environment.
Kenny: Lower borrowing costs improve REITs’ debt serviceability, boost DPU, and make yields more attractive compared to bonds. This should support property values, investor demand, and overall sector performance.
Kenny: REITs with higher gearing, significant floating-rate debt, or near-term refinancing needs—particularly in the industrial and retail sectors—stand to benefit the most. Those with substantial Singapore-dollar borrowings may see quicker savings, as SORA tends to fall faster than U.S. interest rates.
Kenny: It’s very significant. Refinancing at lower rates immediately improves interest coverage and frees up distributable cash, which translates into higher DPUs. That said, REITs need to weigh interest savings against the costs of early loan termination.
Kenny: Generally within the next quarterly DPU report after refinancing, with greater impact as older high-cost debt rolls off in subsequent periods.
Kenny: REITs underperformed due to past rate hikes, while banks and industrial stocks drove STI gains. With U.S. 10-year yields still elevated above 4%, REITs remain cautious. But as risk-free rates decline and DPU growth resumes, the performance gap could narrow.
Kenny: Industrial and logistics REITs are strong, driven by resilient demand and limited supply. Hospitality REITs lag on weaker DPUs, while retail and office REITs have been resilient. Data center REITs are well-positioned given AI-driven demand, with more acquisitions expected as financing costs ease. In the U.S., commercial office properties may rebound as cheaper financing revives transaction activity.
Kenny: CAREIT provides exposure to purpose-built worker and student accommodation—defensive niches with stable occupancy and resilient demand. Pros: strong rental growth and predictable cash flows. Cons: regulatory risks, less diversification, and dependence on education or migrant trends.
Kenny: These yields are above the sector average of 5–6%, reflecting its niche profile and growth potential. The premium compensates for concentration risk and sector-specific exposure.
Kenny: Sponsor backing is critical—it provides operational know-how, acquisition pipeline, and capital access. Geographic diversification balances local risks but introduces FX and regulatory uncertainties.
Kenny: Diversify with mid-cap and REIT-focused index ETFs, overweight S-REITs to capture refinancing and rate-cut benefits ands, and consider niche high-yield plays like CAREIT. This mix balances income, growth, and recovery potential in Singapore’s evolving market.
Note: The above analysis is Kenny's personal views and is NOT buy or sell recommendations of REITsavvy. Investors who would like to leverage his extensive research and years of Singapore REITs investing experience can approach him separately for a REITs Portfolio Consultation
Kenny Loh is a distinguished Wealth Advisory Director with a specialization in holistic investment planning and estate management. He excels in assisting clients to grow their investment capital and establish passive income streams for retirement. Kenny also facilitates tax-efficient portfolio transfers to beneficiaries, ensuring tax-efficient capital appreciation through risk mitigation approaches and optimized wealth transfer through strategic asset structuring.
In addition to his advisory role, Kenny is an esteemed SGX Academy trainer specializing in S-REIT investing and regularly shares his insights on MoneyFM 89.3. He holds the titles of Certified Estate & Legacy Planning Consultant and CERTIFIED FINANCIAL PLANNER (CFP).
With over a decade of experience in holistic estate planning, Kenny employs a unique “3-in-1 Will, LPA, and Standby Trust” solution to address clients’ social considerations, legal obligations, emotional needs, and family harmony. He holds double master’s degrees in Business Administration and Electrical Engineering, and is an Associate Estate Planning Practitioner (AEPP), a designation jointly awarded by The Society of Will Writers & Estate Planning Practitioners (SWWEPP) of the United Kingdom and Estate Planning Practitioner Limited (EPPL), the accreditation body for Asia.
You can join his Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement