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What Investors Should Know About The REITs Market In Singapore

Photo credit: Rafael Matsunaga. Licence: http://creativecommons.org/licenses/by/2.0/

Last week, local bourse operator Singapore Exchange Limited (SGX: S68) released a report about the performance of the REITs sector in Singapore’s stock market.

There were some useful and interesting data found in the report, so let’s take a look:

1. REITs have under-performed the market in the past year

In the 12 months ended 11 January 2017, the 32 REITs and six stapled trusts (a stapled trust is made up of a REIT and a business trust) listed in Singapore have made an average total return of 13.2%, based on data from Singapore Exchange’s report.

In contrast, the SPDR STI ETF (SGX: ES3) had delivered a total return of 13.9% in the same period, according to data from S&P Global Market Intelligence. The SPDR STI ETF is an exchange-traded fund that tracks Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

2. Office REITs have the best one-year performance

The Office REIT segment – this would be REITs that focus on commercial properties – had the strongest one-year total return for the 12 months ended 11 January 2017 at 21.1%.

This is interesting because there was a huge spike in the supply of new office space that came online in 2016. A similar trend is expected for 2017.

Examples of Office REITs in Singapore are Keppel REIT (SGX: K71U) and CapitaLand Commercial Trust (SGX: C61U).

3. Retail REITs have the best three-year performance

The report from Singapore Exchange also showed that the best performing REIT segment in the three-years ended 11 January 2017 is Retail. The segment, which consists of REITs that focus on the ownership of shopping malls, has a three-year total return of 36.7%.

Retail REITs in Singapore have been plagued by concerns over the threat of online shopping. But, that hasn’t stopped them from delivering a strong multi-year performance.

Some examples of retail REITs in Singapore’s market are Fortune Real Estate Investment Trust (SGX: F25U) (at 97.4%, Fortune REIT has the highest three-year total return out of all the REITs and stapled trusts in Singapore), Frasers Centrepoint Trust (SGX: J69U), and Lippo Malls Indonesia Retail Trust (SGX: D5IU).

4. Industrial REITs are the worst-performing group over the last 12 months

Among all the REIT segments, Industrial REIT has the worst one-year total return for the 12 months ended 11 January 2017. But even then, the segment has a positive return of 4.8%.

Some examples of industrial REITs are Mapletree Industrial Trust (SGX: ME8U), Cambridge Industrial Trust (SGX: J91U),  Viva Industrial Trust (SGX: T8B),  Sabana Shariah Compliant REIT (SGX: M1GU).

Industrial REITs that operate in Singapore have been plagued by issues of falling demand and oversupply in recent quarters. But interestingly, that hasn’t stopped them from delivering a positive one-year total return.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.