Singapore REITs Poised for DPU Growth in First Half 2026 Amid Lower Interest Rates July 31, 2026

Singapore REITs Poised for DPU Growth in First Half 2026 Amid Lower Interest Rates

Market Performance and Outlook

Singapore Real Estate Investment Trusts (S-REITs) demonstrated modest resilience in June 2026, with the S-REITs Index gaining 0.4% following May’s 1.6% decline. The sector is positioned for stronger performance ahead, with analysts expecting approximately 3% year-on-year distribution per unit (DPU) growth for the second quarter of 2026, driven by improved net property income from higher rents and reduced financing costs in a lower interest rate environment.


Sector Dynamics and Interest Rate Environment

The average cost of debt for S-REITs has declined by approximately 40 basis points year-on-year as of end-March 2026, with expectations of a further 10 basis points reduction throughout the remainder of the year. This improvement is supported by refinancing opportunities at lower Singapore Dollar benchmark rates, particularly benefiting REITs with substantial SGD-denominated debt portfolios. The 3-month Singapore Overnight Rate Average (SORA) has stabilised around 1.1%, remaining approximately 100 basis points below levels from a year ago.

However, overseas interest rates have begun to edge higher amid expectations of renewed inflationary pressures from the ongoing Middle East conflict. The Reserve Bank of Australia, European Central Bank, and Bank of Japan have all raised policy rates this year, suggesting that borrowing costs for foreign currency-denominated debt will gradually increase, though existing interest rate hedges should cushion the impact.


Sectoral Performance and Investment Strategy

The diversified REIT sub-sector led performance in June with a 3% gain, while the overseas commercial REIT sub-sector declined 6.5%. Retail, office, and industrial REITs are expected to continue delivering mid- to high-single-digit rental reversions, though hospitality REITs face softer operating performance due to higher airfares and travel disruptions from Middle East conflicts.

Analysts maintain an overweight stance on S-REITs whilst remaining selective, favouring REITs with robust balance sheets, defensive earnings profiles, and higher proportions of fixed-rate debt to limit interest rate volatility exposure. Retail S-REITs remain preferred, supported by healthy tenant sales and limited new supply, which should underpin mid- to high-single-digit rental reversions in 2026.


Frequently Asked Questions

Q: What DPU growth is expected for S-REITs in 2Q26?

A: S-REITs are expected to report approximately 3% year-on-year DPU growth on average, driven by stronger net property income from higher rents and lower financing costs.

Q: How have S-REIT financing costs changed?

A: The average cost of debt for S-REITs declined by approximately 40 basis points year-on-year as of end-March 2026, with expectations of a further 10 basis points decline over the rest of the year.

Q: Which S-REIT sectors performed best and worst in June?

A: The Singapore diversified REIT sub-sector was the best performer, gaining 3%, while the overseas commercial REIT sub-sector was the weakest, declining 6.5%.

Q: What is the current investment strategy for S-REITs?

A: Analysts maintain an overweight stance but remain selective, preferring REITs with robust balance sheets, defensive earnings profiles, and higher proportions of fixed-rate debt to limit interest rate volatility exposure.

Q: How might the SG-JB RTS impact Singapore retail REITs?

A: The impact is expected to be manageable, with potential retail leakage to Johor remaining relatively small at just 0.4% of Singapore's 2025 retail and F&B sales, whilst the RTS could create new opportunities by expanding catchment areas.

Q: What rental reversion expectations exist for different REIT sectors?

A: Retail, office, and industrial REITs are expected to continue delivering mid- to high-single-digit rental reversions, while hospitality REITs are likely to see softer operating performance.

Q: Which factors are supporting the positive outlook for retail S-REITs?

A: : Retail S-REITs are supported by healthy tenant sales and limited new supply, which should underpin mid- to high-single-digit rental reversions in 2026.

 

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

 

Disclaimer

These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. 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. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products.

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 units in any fund 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.

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.

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

About the author

Singapore REITs Poised for DPU Growth in First Half 2026 Amid Lower Interest Rates

Darren Chan

Darren has over seven years of experience across both the buy-side and sell-side. During his tenure as a fund manager, he managed multiple funds and mandates, including dividend income, growth, customised, Singapore-focused, and regionally focused strategies. He holds a First-Class Honours degree in Banking and Finance from the University of London.

Related Articles

Alphabet Inc. Achieves Record Cloud Growth Despite Free Cash Flow Pressure, Upgraded to BUY with $425 Target Price Alphabet Inc. Achieves Record Cloud Growth Despite Free Cash Flow Pressure, Upgraded to BUY with $425 Target Price
Keppel DC REIT Delivers Strong 11% DPU Growth on Acquisitions and Rising Rents, ACCUMULATE Rating with S$2.46 Target Keppel DC REIT Delivers Strong 11% DPU Growth on Acquisitions and Rising Rents, ACCUMULATE Rating with S$2.46 Target
OUE REIT Hospitality Segment Delivers Strong Performance, Maintains BUY Rating with S$0.45 Target Price OUE REIT Hospitality Segment Delivers Strong Performance, Maintains BUY Rating with S$0.45 Target Price
SIA Engineering Co. Maintains BUY Rating Despite Temporary Earnings Dip, S$4.06 Target Price Unchanged SIA Engineering Co. Maintains BUY Rating Despite Temporary Earnings Dip, S$4.06 Target Price Unchanged
Market Journal

Join Events & Seminars

Learn best practices and latest market outlook from experts and special guests

Market Journal

Hear & Ask our Experts

Join live weekly market calls

Market Journal

Read Popular News & Reports, Technical Pulses

at www.poems.com.sg/stock-research

Market Journal

Subscribe to our YouTube Channel

New video every week

IMPORTANT INFORMATION

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