The S-REIT sector has shown stable performance in the year-to-date, with the iEdge S-REIT index having gained 6.2% over the past eight months to reach 1,066.3 as of Aug 26, with dividends boosting the total returns to 10.6% for the period. More than three-quarters of the 30 constituents on the iEdge S-REIT index delivered positive total returns in the first eight months of the year.
The top five performers for the year-to-Aug 26, included OUE REIT, Frasers Hospitality Trust, CapitaLand Integrated Commercial Trust, Keppel REIT and Mapletree Pan Asia Commercial Trust, achieving double-digit total returns ranging from 17.9% to 24.6%. These outperformers reported robust operating performance with stable occupancy and positive rental reversions.
In the first eight months of 2025, retail investors were net buyers of S-REITs, with the sector receiving a total net inflow of around $570 million as of Aug 26. Conversely, institutional investors were net sellers, with approximately $790 million in net outflows.
However, several S-REITs bucked the trend and recorded net institutional inflows, such as Suntec REIT, CapitaLand Integrated Commercial Trust and United Hampshire REIT.
Institutions have also begun to reverse their net selling in the REIT sector this year, as evidenced by reduced net outflows compared to last year’s $1 billion, and periods of net inflows in some weeks.
Lower benchmark rates create a more conducive environment
See also: Two REITs stand out in the year to Sept 1 in price performance
In Singapore, domestic interest rates have been on a downward trend, as evidenced by the decline in the 3M Singapore Overnight Rate Average (SORA) — from 3% on Jan 2 to 1.6% by Aug 26. This favourable environment has energised the sector’s equity fundraising landscape this year, as seen with an uptick in placements, preferential offerings and new initial public offerings exceeding $2.5 billion.
S-REITs have sustained strong momentum in secondary fundraising from 2024’s $2.8 billion, raising over $1.5 billion so far in 2025. This marks a rebound from previous quieter years that were impacted by higher interest rates.
A notable transaction in August saw CapitaLand Integrated Commercial Trust launch a private placement seeking $500 million to acquire the remaining 55% stake in CapitaSpring. Due to robust demand — the placement was 4.9 times oversubscribed — the manager increased the issue size by $100 million, ultimately raising $600 million at $2.11 per unit. This acquisition is expected to be accretive to distribution per unit, reinforcing the trust’s commitment to core domestic assets.
See also: Investors focus on interest rates, DPU, total returns at TES REITs Investment Forum
Separately, CapitaLand Ascendas REIT conducted a private placement in May, issuing 202.4 million units at $2.47 each and raising $500 million, with the placement being 4.1 times oversubscribed. The proceeds were used to partly finance the acquisition of 9 Tai Seng Drive, a Tier III colocation data centre in Singapore, and 5 Science Park Drive. The total purchase consideration for these acquisitions is approximately $700.2 million.
Meanwhile, US Federal Reserve Chair Jerome Powell’s recent comments at Jackson Hole have signalled that an imminent rate cut to the federal funds rate is likely in September.
The return of REIT IPOs
This year, NTT DC REIT staged a landmark mega listing, becoming one of Asia’s largest Data Centre REIT IPOs and unlocking broader avenues for investors keen to tap into the assets powering the AI revolution. Debuting with an IPO market capitalisation of US$1.03 billion ($1.3 billion), NTT DC REIT is now the third pure-play data centre REIT listed in the city-state. Its portfolio spans six data centres — four in the US, one in Austria and one in Singapore — collectively appraised at US$1.6 billion. The portfolio has a design IT load of around 90.7MW and is approximately 94.3% occupied as of December 2024. It features a balanced mix of hyperscale and colocation customers, with a weighted average lease expiry of 4.8 years.
The REIT’s sponsor is part of the NTT Group, which ranks as the world’s third-largest data centre provider (excluding China). According to NTT DC REIT’s prospectus, the global data centre market has experienced explosive growth: commissioned power expanded from 18.2GW in 2020 to 49.1GW in 2024, representing a compound annual growth rate (CAGR) of 28.1%. Estimates suggest this growth will continue at a double-digit pace until 2027, driven by the proliferation of cloud solutions and the rapid emergence of AI and generative AI in recent years.
In parallel, Centurion Corporation has unveiled plans to launch the Centurion Accommodation REIT, which will focus on income-generating assets in the global purpose-built worker accommodation (PBWA), purpose-built student accommodation (PBSA), and other long-stay lodging segments — excluding Malaysia.
The REIT’s initial portfolio is set to comprise 14 assets valued at over $1.8 billion, including five PBWA assets in Singapore, eight PBSA assets in the UK, and one PBSA asset in Australia. The PBWA assets have 21,282 beds, and the PBSA assets have 2,772 beds as of March 31. Centurion Corporation expects to divest about $1.2 billion worth of its stake in the initial portfolio to the REIT, comprising around $497 million in cash and about $687 million in the form of sponsor units issued by the REIT.
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Analysts maintain positive outlook on sector
DBS Group Research analysts said in a note this month that the house maintains a constructive outlook on S-REITs, citing undemanding valuations, a favourable yield spread, and improving prospects for distributable income growth as interest rates decline. DBS sees retail S-REITs as particularly well-positioned for organic growth in the second half of 2025, with industrial and data centre segments also showing resilience.
Elsewhere, UOB Kay Hian analyst Jonathan Koh remains “overweight” on Singapore REITs, expecting a US Federal Reserve rate cut to boost liquidity.
Emelia Tan, Director, Research and FinLit, SGX Group
