If the stellar performance of Mapletree Greater China Commercial Trust on its trading debut was anything to go by, experts say real estate investment trusts (REITs) will continue to be popular investment vehicles in Singapore.
They add that Singapore’s strong currency and diversified offerings are among the sector’s biggest draws.
REITs provide annual returns ranging from 2% to 6% – higher than placing money in bank deposits.
Eddy Loh, an equity strategist at Barclays, said: “I think investors are still very keen to peruse dividend-yielding instruments, particularly in Singapore, which actually generate stable income growth and dividend payout.”
Singapore now leads the region with the highest REIT dividend yields, topping counterparts like Australia and Hong Kong.
For instance, Mapletree Industrial REIT offers dividend yields of about 6.8%.
Barclays’ Eddy Loh said: “It’s a question of the mix of the REITs we have in Singapore. We do have a good spread of REITs ranging from retail, commercial to industrial. The strength of the Singapore dollar has also attracted a lot of investors, because it does actually enhance their returns, especially in US dollar terms.”
Meanwhile, property consultants CBRE said REIT markets rose 30 percent globally last year and that Singapore’s high-yielding trusts are due in part to good sponsors.
But experts say dividend yields could continue to wane as stock prices rise and investor confidence strengthens.
Earlier this week, Citi Research said the sector could face tighter yields, adding that it favours Singapore developers instead of S-REITs.
Still property consultants said REITs remain a sound investment and the outlook for the year is robust.
CBRE’s executive director of international valuation (Asia), Danny Mohr, said: “We think the REIT market is quite strong. Obviously Mapletree listing today, the amount of capital coming into Asia is quite strong compared to last few years. We hear of a potential listing in Singapore, the same in Japan. So I think this year will be quite strong for the REIT sector.”
So far there has been no other REIT listings that have been formally announced yet for 2013.
Source : Channel NewsAsia – 7 Mar 2013