DBS Group Research is of the view that Singapore hotels are shifting towards an equilibrium. In a Dec 6 report, DBS analysts say the country’s tourism rebound is currently entering a “late-cycle phase”, with year-to-date arrivals tracking the lower end of the target set by Singapore Tourism Board (STB).
Analysts Geraldine Wong and Derek Tan say: “We anticipate further normalisation in 2026 with mid-single-digit growth in arrivals on higher China tourists (on travel diversion due to ongoing Japam-China tensions) and gradual recoveries in SGD-sensitive markets such as Japan and Indonesia.”
STB’s ambition to triple MICE receipts by 2040 adds longer-term upside as Singapore steps up bidding for global events, say the analysts. For now, revenue per available room (RevPAR) in Singapore has eased 4% y-o-y amid softer room rates and a surge in new inventory, and supply pressures will intensify with a further 3.7% of room stock entering in 2026–2027, including the Liang Court redevelopment.
“Against this backdrop, hoteliers are likely to maintain an occupancy-first approach in 2026 as elevated supply tempers room rate growth and arrival growth stalls,” say Wong and Tan, who expects RevPAR to gain about 2% y-o-y in 2026, led by firmer occupancy rather than pricing, with room rates likely to remain flat.
For S-REITs, growth should increasingly be driven by asset enhancement initiative (AEI) contributions and overseas markets, while domestically the analysts see a more balanced recovery across hotel tiers as the luxury segment rebounds from a low 2025 base.
New IPOs in the purpose-built workers accommodation space, such as the recent listing of Centurion Accommodation REIT (CAREIT), also broaden investor options, offering higher room rate growth of 3%–5% y-o-y and steady occupancy levels that are relatively insulated from macro cycles.
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Among the hospitality S-REITs, Wong and Tan like CapitaLand Ascott Trust (CLAS) for its diversified portfolio, AEI-driven earnings momentum and sector-leading 6.4% yield. DBS has a “buy” call and $1.15 target price on the counter.
Another preference is the recently listed CAREIT that has made it into DBS’ top picks, supported by favourable demand–supply dynamics in Singapore’s purpose-built workers’ accommodation segment and expectations of double-digit DPU growth underpinned by rising bed capacity. DBS has a “buy” call and $1.30 target price on CAREIT.
