Over the weekend of May 24th, the REITs Symposium, a collaborative event by ShareInvestor, InvestingNote, and REITAS, featured a segment led by Emelia Tan, Director of Finlit & Research at SGX. Emelia shared crucial insights, performance trends, and the strategic outlook for Singapore Real Estate Investment Trusts (S-REITs). She painted a dynamic picture of the evolving landscape for Singapore-listed Real Estate Investment Trusts (S-REITs). From market performance trends to strategic expansion, here's what investors and market observers need to know about this new era.
1. A Mixed Bag in Performance—But Opportunity Brews
The start of 2025 saw mixed returns across S-REIT sub-segments. While healthcare and retail REITs posted relatively positive total returns, segments like hospitality and industrial REITs lagged. Interestingly, the iEdge S-REIT Index posted a 4M 2025 return of 0.8%, contrasting starkly with a -6.0% return for MSCI US REITs.
Still, dividend yields remain attractive—averaging around 5.7% across the sector. This keeps S-REITs relevant for income-focused investors.
2. Institutional Interest Rising Amid Valuation Discounts
Institutional investors are showing growing interest in S-REITs, enticed by historically low valuations. The iEdge S-REIT Index trades at 0.84x price-to-book, nearly 20% below its long-term average—a key signal for value hunters.
Institutions also cite liquidity, strategic access to property sectors, and diversification as compelling reasons to allocate capital to REITs.
3. Rate Pressures and Tariff Tensions Test Resilience
Interest rates continue to weigh on REITs. Rising financing costs have impacted distribution per unit (DPU), though many REITs have hedged interest rates effectively—75% of debts are fixed or hedged.
Additionally, geopolitical tensions, such as the “tariff tantrum” tied to U.S. policies, have led to short-term volatility. During early April 2025, most S-REIT segments saw single-digit declines in total returns, followed by a partial rebound later in the month.
4. Balance Sheet Strength and Fundraising Momentum
Despite macro challenges, S-REITs remain fundamentally strong:
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Average gearing sits at 39.6%, well below the regulatory cap of 50%.
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Interest coverage ratios average 3.3x, indicating financial resilience.
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There's also ~S$21 billion in debt headroom, enabling growth-focused acquisitions.
In fact, secondary fundraising activities surged in 2024, with S$3 billion raised—up from S$1.9 billion in 2023. Notable deals include:
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Keppel DC REIT: Acquisition of AI-ready data centers.
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CapitaLand Integrated Commercial Trust: Acquisition of a stake in Ion Orchard.
5. Strategic Growth: New Markets, Mandates, and Makeovers
S-REITs are not standing still. Several have expanded mandates into France, Germany, and Japan, with a strategic pivot toward data centers, healthcare facilities, and student accommodation.
Closer to home, asset enhancement initiatives (AEIs) are delivering double-digit ROI. VivoCity and Tampines 1 saw expanded lettable areas and strong tenant sales, showing that retail REITs can thrive with innovation and strategic capex.
6. Diversification and ETFs: Tools for Every Investor
For those seeking diversified exposure, REIT ETFs offer an accessible path:
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Lion-Phillip S-REIT ETF: Yield of 5.83%
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CSOP iEdge S-REIT Leaders ETF: Yield of 6.09%
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NikkoAM-StraitsTrading Asia Ex Japan REIT ETF: Regional diversification across Asia-Pacific
These funds provide semi-annual or quarterly distributions and are built on carefully curated REIT indices, ideal for long-term passive investors.
Conclusion: A New Era, But Not Without Challenges
While headwinds like interest rates and geopolitical frictions remain, the fundamentals and strategic agility of S-REITs are positioning them for recovery and long-term growth. With strong institutional support, discounted valuations, and proactive asset management, 2025 may well be the turning point for Singapore’s REIT market.
For investors seeking yield, diversification, and strategic exposure to real assets, S-REITs offer a compelling case—perhaps more now than ever.
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