Singapore REITs: Roaring back in the year of the Dragon?

After multiple years of underperformance, we believe that 2024 could be a comeback year for the Singapore Real Estate Investment Trusts (S-REITs), with the macro tide turning towards expectations of a pause in the hiking cycle and cut in interest rates. The sector’s significant underperformance positions them well for a short term rebound trade – albeit with some volatility, given the data dependent nature of the Fed pivot. We maintain a neutral view over the medium term as high but stable interest rates are likely to continue putting upward pressure on interest costs, slowing distributable income growth. Investors can consider three ways to augment REIT returns in the current climate: 1) Buy the quality laggards, 2) Invest in the inorganic growers, and for more risk tolerant investors: 3) Consider quality Greater China names with turnaround potential as a source of long term upside.This episode is presented by Jen-Ai Chua, Research Analyst in Singapore