S-REITs look promising in a reopening scenario April 29, 2022

S-REITs look promising in a reopening scenario

S-REITS are looking attractive in 2022 and investors are flocking to acquire a piece of the sector, not only for its stability and low risk but for its potential to produce dividends. Although 2021 saw strict COVID-19 lockdown measures and regulations, S-REITs averaged an annual 6% return – capturing the attention of investors in2022.1

Key factors

The main factors likely to help S-REITS improve their performance as the COVID-19 pandemic wanes are the return of workers to their offices, the recovery of the retail sector and the revival of the hospitality industry.

Office Workers Returning to Offices

The return to office is expected to allow tenants to better evaluate their space needs and result in a pickup in leasing momentum (more decisive renewal discussions but could also result in negative outcomes like downsizing).

Co-working is also likely to have an impact on how the S-REITS perform, as co-working operators are usually tenants of the S-REIT. They lease space from S-REITS (e.g. WeWork leased 21 Collyer Quay from CICT) and pay rent regardless their current occupancy/subscription. And while that helps to fill asset/portfolio occupancy, they indirectly compete with the S-REITS for tenants. As such, tenants who used to lease office space from the S-REITS, and who are now transitioning to co-working will no longer lease space directly from the S-REIT.

Additionally, delays in the completion of new office buildings due to manpower disruptions for the past two years have caused office demand to remain tight.

Separately, Mr Alan Cheong, Executive Director of Research and Consultancy at Savills Singapore, told CNA in late March 2022 that landlords of older buildings will potentially take their properties off the market for redevelopment or refitting, which could see a surge in the cost of office rents due to a spatial crunch derived from a mass return of office workers to CBD areas.2


Besides the return to office, the easing of COVID-19 measures for dine-in groups, atrium sales, the increase in venue capacity limits and sale of alcoholic beverages will benefit the retail sector.

Since 29 March 2022, the dine-in group size has been raised from 5 to 10, atrium sales will resume, capacity limits have been increased to 75% of venue capacity or 1000 pax, and the sale and consumption of alcohol in public bars/merchants is now permitted after 10.30 pm.

These measures have been a huge restraint and hindrance to the public’s daily lives – so understandably, a sharp hike in footfall in popular retail areas such as shopping malls and Clarke Quay/Boat Quay is largely expected.

According to Natalie Ong, Research Analyst at Phillip Securities Research, in her Singapore REITs Monthly report dated 13 April 2022: “(The) return to office and larger dine-in group sizes should help draw more footfall to malls and uplift tenant sales for both suburban and downtown malls. The Jan22 retail and F&B sales have recovered, coming in 1.8% and 5.9% below Jan19 levels.3


The relaxation of COVID-19 travel restrictions is also expected to give Singapore’s hospitality sector a boost.

Since 1 April 2022, entry into Singapore no longer requires quarantine for vaccinated travellers and they are subjected only to a pre-departure test. But analysts expect the sector to have a long road to recovery. The World Tourism Organization estimates that the industry may only return to pre-COVID-19 levels in 2024.4

Some things to consider before investing in REITS

Typically, REITs offer stable passive income with average return of4 to 8% annually. But there are many ways to deduce the performance a REIT stock and to pick out the best performing ones. Terminologies to familarise yourself with when analysing REITs include

  • Dividend payouts – REITs are required to pay at least 90% of their income as dividends. High dividends do not necessarily equate to a good performing Reit. At times, a high dividend yield could potentially mean that a company’s share price has dropped significantly. Offshore S-REIT typically offer higher dividend yields compared to their Singapore-focused counterparts to compensate for the risk associated with owning overseas assets.
  • Occupancy rate – This refers to the ratio of rented space against the total amount of available space. Investors should identify if an asset’s lower occupancy is transitionary or indication of structural shift or oversupply, implying that softer leasing demand is expected to persist.
  • Price-to-NAV (P/NAV) – A P/NAV below/above 1.0x implies that the REIT is trading at a discount/premium to NAV. Subsectors like industrial trade at a premium as investors ascribe premiums to asset class with lower earnings volatility. On the other hand, hospitality REITs tend to trade at a discount to NAV due to the greater perceived risk associated with the asset class.
  • Net property income (NPI) – Gross revenues less operational costs and related expenses.
  • Aggregate leverage – Commonly referred to as gearing, the aggregate leverage shows the REITs’ debt-to-asset ratio. This is essential because a low aggregate leverage ratio means that a REIT is able to take on more debt. In contrast, a high aggregate leverage means that the REIT has more debt and might face difficulties fulfilling its interest obligation.5

REIT counters you could consider

CapitaLand Integrated Commercial Trust (CICT)

Widely known as Singapore’s largest diversified REIT, CapitaLand Integrated Commercial Trust (CICT) resulted from the merger between CapitaLand Mall Trust and CapitaLand Commercial Trust. CICT’s portfolio comprised Grade A office and retail assets. Approximately 92% of the portfolio is located in Singapore. Notable assets include Raffles City, Funan, Plaza Singapura, Tampines Mall, Bugis + and Bugis Junction, IMM Building and Grade A offices such as CapitaGreen, Capital Tower and Battery Road.6

Mapletree Industrial Trust

The industrial sector is also expected to perform well as Singapore reopen.

Phillip Securities Research Analyst Natalie Ong’s recommendation for the Industrials sector is OVERWEIGHT in her latest report on REITS on the stocksbnb.com (https://www.stocksbnb.com/reports/singapore-reits-monthly-green-shoots-all-around/)7

In her report, she said: ““Industrial REITs benefit from the secular growth of new economy tenants such as tech, life sciences, biomedical, semi-con and electronics manufacturing, which typically locate themselves in high-spec, science and business parks and warehouses.”

If you want to venture into this territory, one S-REIT to look at could be Mapletree Industrial Trust, an industrial S-REIT with a portfolio consisting of business parks buildings, data centres, high-tech centres, factories and others.8

Considering that the global workforce and students were working and studying at home during the COVID-19 pandemic, the significance of data centres and data traffic grew exponentially throughout the globe.9

Ascendas REIT

Singapore’s first and largest listed industrial and business space REIT – Ascendas REIT is also an option you can look at. This S-REIT has a portfolio spread across different sectors and countries; with over 200 industrial, business and commercial properties in Singapore, United States, Australia and Europe. Furthermore, it has been acquiring new data centres, business centres and logistics facilities in Singapore and United States.

If you want to check out Phillip Securities Research Analyst’ Natalie Ong’s REIT picks for 2022 go to https://www.stocksbnb.com/wp-content/uploads/pdf/SREITsMonthly20220413.pdf10

For more information on S-REITS from our POEMS website, go to: https://www.poems.com.sg/s-reits/


  • [1]https://www.singsaver.com.sg/blog/best-reits-in-singapore
  • [2]https://www.stocksbnb.com/wp-content/uploads/pdf/SREITsMonthly20220413.pdf
  • [3]https://www.stocksbnb.com/reports/singapore-reits-monthly-green-shoots-all-around/
  • [4]https://www.stocksbnb.com/wp-content/uploads/pdf/SREITsMonthly20220413.pdf
  • [5]https://www.singsaver.com.sg/blog/best-reits-in-singapore
  • [6]https://www.singsaver.com.sg/blog/best-reits-in-singapore
  • [7]https://www.singsaver.com.sg/blog/best-reits-in-singapore
  • [8]https://www.singsaver.com.sg/blog/best-reits-in-singapore
  • [9]https://www.singsaver.com.sg/blog/best-reits-in-singapore
  • [10]https://www.stocksbnb.com/wp-content/uploads/pdf/SREITsMonthly20220413.pdf
  • Disclaimer

    These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

    The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

    Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com