From left to right: Guy Cawthra, CEO, Lendlease Global Commercial Trust; Calvin Yeo, managing director & head of cccupier strategy and solutions, Knight Frank Singapore; Song Seng Wun, economic advisor, CGS SG; Malcolm Koo, CEO, CGS SG; Natalie Ong, research analyst, CGS SG and Lock Mun Yee, deputy head of research, CGS SG. Photo: CGS SG
Amid the geopolitical uncertainties, Singapore was described by the veteran economist as a “canary in the coal mine” with its high export-to-GDP ratio, which makes the city-state especially sensitive to global shifts.
Investors seeking undervalued sectors in Singapore may consider Singapore REITs (S-REITs), which have average yields of 6.1% and a price-to-book ratio below historical norms. CGS SG's deputy head of research Lock Mun Yee also highlighted the falling interest rates and undervaluation relative to their asset base, which makes now an “opportune time” to reassess investors’ exposure to S-REITs.
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That said, not all REITs will perform equally, and selectivity will matter.
Lock sees counters that are exposed to sectors with sectoral tailwinds, such as data centres in Singapore, the non-discretionary retail segment and the industrial segment with long weighted average lease expiries, as better placed to go through demand fluctuations.
She adds that CGSI’s preferred REIT picks are CapitaLand Ascendas REITand Keppel DC REIT for their strong balance sheets and sector positioning.
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Integrated REITs such as CapitaLand Integrated Commercial Trust(CICT) were also highlighted due to its portfolio of mixed-use developments which align with the rise of demand for hybrid work and physical office space in Singapore.
According to Calvin Yeo, managing director and head of occupier strategy and solutions at Knight Frank Singapore, quality developments are preferred due to corporate environmental, social and governance (ESG) mandates and employees’ preferences for better-designed, integrated work environments. Furthermore, post-pandemic occupancies have stayed above 90% with leasing recoveries after major tenant moves, he adds.
