S-REITs look stable for 2012

Global credit rating agency Moody’s Investors Service has maintained its stable forecast on Singapore Real Estate Investment Trusts (S-REITs) over the next 12 to 18 months, on expectations of loose credit conditions and increasing rents.

Alvin Tan, an analyst at Moody’s, said in a report that most rated S-REITs carry investment-grade ratings which “reflect issuers’ relatively stable operating incomes, high-quality assets, and low development risk.”

The agency also expects the Singapore economy to expand 6.3 percent by the end of 2011, which should lead to rising rental rates and high occupancies.

However, it noted that the rental rate increases could be slower than the previous increase, with this year’s economic growth expected to pale in comparison to 2010’s 14.5 percent.

“In our base case assumptions, we expect rental rates in the suburban retail and industrial segments to remain stable in 2011 and 2012, due to Singapore’s moderate economic growth and these rentals’ relative stability during the last economic downturn,” Tan said.

On the contrary, rents for the urban commercial and retail sectors are set to be more volatile, he added.

Source : PropertyGuru – 21 Jun 2011

Join The Discussion

Compare listings