As observers and global investors have noted, US Treasuries and the dollar are trusted because of the rule of law. When that trust breaks down, as seen in unrest in US cities and volatility around tariffs and threats to allies, investors begin to question the greenback’s status as a reserve currency. In recent weeks, the AUD has gained ground against the greenback.
On Dec 11, 2025, during a briefing with analysts, Eugene Cheng, Group CFO, Sembcorp Industries, said: “We recognise that the AUD versus SGD is in favour of the AUD when you look ahead. The banks’ projection of forward curves between AUD, USD and SGD FX (foreign exchange) cross rates over time shows the AUD may appreciate.” Cheng was fielding questions in response to Sembcorp’s announcement of its proposed acquisition of Australian-based Alinta Energy for an enterprise value of A$6.5 billion ($5.7 billion). Shareholders voted for the proposal on Jan 30.
Before the second Trump administration, the gradual but persistent strengthening of the SGD meant the experience of S-REITs in Australia was somewhat mixed. This was based on their entry prices and the current valuations of their investment properties. Could this all change given the strength of the AUD?
Australia has been a favoured destination for REITs for years. Most recently, OUE REIT announced it is in exclusive talks with Mitsubishi Real Estate Asia to acquire a 20% stake in Salesforce Tower in Sydney. Han Khim Siew, CEO of OUE REIT’s manager, said in a CNBC interview: “We’ve looked at various gateway cities across Asia, and the only location where we can pick up alpha is in Sydney. The dynamics are very favourable for us. Sydney allows us to acquire alpha assets where there is similar institutional interest to Singapore, but the yields are at 5% compared to 3.5% in Singapore, so there’s a nice pick-up.”
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According to Han, average occupancy has risen to 95%, rental growth is coming through, and interest rates haven’t come off in Australia.
Hence, capital values are picking up following yield compression when they do. The SGD has strengthened, and OUE REIT should capitalise on the currency’s strength by moving some funds into Australia, he adds.
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Mixed results in Australia
While Sembcorp’s Cheng and OUE REIT’s Han are positive on the AUD, S-REITs’ track record in Australia has been uneven.
In 2014, when CapitaLand divested Australand, the AUD averaged around $1.1425, compared with $0.8725 in the week of Jan 26 to 30. When CapitaLand Integrated Commercial Trust (CICT) and Keppel REIT acquired properties in North Sydney in December 2021, the two currencies were more or less at parity. To date, the assets are valued at more than 38% lower.
Keppel REIT, which acquired 2 Blue Street (Blue & William) at around the same time as CICT’s acquisitions in North Sydney, experienced a loss in valuation of that particular property of 38.86% based on end-December 2024 valuations. CICT experienced a 36% decline in its 100 Arthur Street property between December 2021 and December 2024. However, properties acquired more than a decade ago by both Suntec REIT and Keppel REIT are about evenly matched. Although valuations rose in AUD, the gains were offset by the currency impact.
Wee Hur, a mid-sized construction company, has done relatively well in Australia, according to its own statements. It started its Wee Hur PBSA Master Fund (Fund 1) in 2017 to hold a 1,578-bed Purpose-Built Student Accommodation (PBSA) in Brisbane. In 2021, Wee Hur constituted Wee Hur PBSA Fund II for the development of land in Sydney for PBSA. In 2023, Wee Hur divested its stake in Fund 1. In 2024, Wee Hur divested a 37% stake in Fund II. Its 2024 annual report states that Wee Hur has disposed of all its PBSA in Fund 1 for A$1.6 billion, but does not provide details of either its internal rate of return (IRR) or return on investment (ROI).
The new reality
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Heightened inflation is likely to keep Australian rates higher than other G10 economies, with the Reserve Bank of Australia (RBA) raising cash rates by 25 basis points (bps) to 3.85% on Feb 3. The US Federal Reserve Board kept its federal funds rate unchanged at 3.25%-3.5% at the Federal Open Market Committee (FOMC) meeting on Jan 28 and 29. However, the appointment of Kevin Warsh as Fed chair, which still requires confirmation hearings, indicates that Trump is pressuring the Fed to ease monetary policy.
Warsh was a supporter of higher interest rates after the Global Financial Crisis. As a Fed governor, he even voted to raise rates during the depths of the recession. He kept this tough stance on inflation through the past 15 years, but now appears more open to lower rates.
“We do not expect the transition to Kevin Warsh as Fed chair to alter monetary policy meaningfully this year, with the resilient economy, elevated inflation, and a divided FOMC limiting scope for easing,” says Barclays.
Despite this, a firmer RBA cash rate would imply that the AUD remains firm against the USD, which is under pressure from time to time because of volatility caused by the current US administration. Strategists are thus forecasting a firmer AUD versus the USD this year.
For instance, David Meier, an economist at Julius Baer, says: “Among G10 currencies, the main beneficiaries of a weaker USD have been the Norwegian kroner and the AUD, both of which rank bullish in our foreign exchange framework, reflecting their status as high-yielding G10 currencies.”
Interest is particularly concentrated on the AUD, which benefits from a cyclical advantage, with GDP growth expected to outperform most peers this year, Meier continues. His view is supported by hawkish statements from the RBA, which position the AUD to offer the highest interest rates in the G10 space.
“Despite these advantages, investors should keep in mind that the AUD is sensitive to Chinese demand and, as a cyclical currency, offers no protection in risk-off episodes,” he adds.
But what about the SGD and the AUD? In the past five years, the AUD and SGD FX cross rate has gone from parity to 87 cents to A$1. Excluding Liberation Day, the low was $0.8278 in August 2025.
As of Jan 27, the AUD is at $0.8785, significantly higher than the August 2025 low, but still a long way from parity, when Keppel REIT and CICT acquired their properties in North Sydney in December 2021.
A rally in the AUD and SGD FX cross rate would benefit Keppel REIT and Suntec REIT more than CICT.
Keppel REIT’s Australian portfolio accounts for 17.8% of assets (after the Marina Bay Financial Centre Tower 3 acquisition) and contributes 27.4% of net property income. Suntec REIT’s Australian portfolio accounts for 12% of assets and 20% of income contribution. Only 3% of CICT’s $25.9 billion portfolio comprises Australian assets as at Dec 31, 2024.
What to expect with S$NEER
But the AUD’s strength against the SGD is not a given. On Jan 29, the Monetary Authority of Singapore (MAS) says the risks to the growth and inflation outlook are tilted to the upside. “Persistently stronger-than-expected GDP growth could lead to higher wage growth and boost consumer sentiment, exacerbating demand-pull inflationary pressures. Supply shocks, including those triggered by geopolitical developments, risk lifting imported costs,” adds MAS.
Downside risks could emerge from a correction in global financial markets or a pullback in AI-related investment, the central bank added. MAS will maintain the prevailing rate of appreciation of the SGD nominal effective exchange rate (S$NEER) policy band.
In its October 2025 monetary policy review, MAS maintained the S$NEER policy band’s appreciation rate, with no change to its width or the level at which it is centred. Since then, the S$NEER has strengthened in the upper half of the appreciating policy band.
“We are positive on the growth outlook and see simmering inflation pressures emerging. We expect the MAS to tighten and steepen the appreciation bias slightly at the April or July meeting. The positive output gap will likely widen in the first half of 2026, with the growth momentum from the AI capex boom carrying over from last year,” says a Maybank report.
Maybank’s economists have indicated that the S$NEER is trading about 1.9% above the midpoint, near the upper bound of the band. The SGD has appreciated by about +1.7% against the USD since the start of the year.
“We forecast the three-month Singapore overnight rate average sliding to 0.7% by end-2026 (from current 1.15%), driven by safe-haven flows and based on our view that the Fed will likely cut the funds rate by 50 bps in 2026,” adds Maybank.
Home market priority?
Keppel REIT and CICT appear to have pivoted to prime Singapore assets despite their tighter yields.
Tan Choon Siang, CEO of CICT’s manager, has gone on record saying that CICT “will focus on Singapore first because if there are enough things to do here, there’s no reason for us to think about going overseas and we have proven over the last few years that there are enough things for us to do locally,” when asked if there were any plans to scale in Australia in an interview in August 2025.
On Jan 15, following the award of the government land sale site to a consortium comprising CICT, CapitaLand Development and UOL Group. Tan says: “This move strengthens CICT’s portfolio exposure in Singapore, aligning with our value creation strategy and maintaining a Singapore-centric focus. It further cements CICT’s position as the proxy for commercial real estate in Singapore.”
In December, Keppel REIT pivoted to Singapore, acquiring Hongkong Land’s one-third stake in Marina Bay Financial Centre Tower 3 at near book value.
During a Q&A session by the Securities Investors Association Singapore, Chua Hsien Yang, CEO of Keppel REIT’s manager, described some of the drama that unfolded when he and the management of Suntec REIT were informed of Hongkong Land’s intention to divest its one-third stake in One Raffles Quay and Marina Bay Financial Centre Towers 1, 2 and 3.
The two managers had 20 days to decide whether to accept their respective rights of first refusal.
‘Very good asset’
“We believe that Tower 3 is a very good asset, with DBS as a key tenant. DBS is a strong name in Singapore and a globally recognised financial institution with an investment-grade credit rating. The presence of DBS provides income security and portfolio resilience,” says Chua.
This acquisition was presented to the entire board for consideration, which is predominantly independent.
As Chua says: “The transaction was reviewed based on our usual acquisition process. It received support from the board on the merits, which cover the asset’s quality and performance, as well as the strength and potential of the market in which it is located.”
“This is a highly strategic opportunity for Keppel REIT to deepen its ownership in Marina Bay Financial Centre Tower 3. It is in a tightly held market with no upcoming new office supply in the next few years. Such opportunities are very rare, and we have not seen transactions of such nature in Singapore for a long time.”
He adds: “Singapore is also an investment market of choice for many investors, further reinforcing the attractiveness of this transaction... which will also raise our portfolio exposure in Singapore and aligns with our strategy to focus on key markets and premium locations.”
Developers profit from Australia
Developers have had a better experience than S-REITs. When CapitaLand divested Australand in 2014, it was swiftly snapped up by Frasers Property (FPL) and has since been an integral part of its profit before interest and tax (pbit).
In FY2025 ended Sept 30, Frasers Property Australia (FPA) contributed $94.4 million (+20.3% y-o-y), or around 8% of pbit.
Exposure to Australia has grown from $2.1 billion (18% of assets) in FY2013 to $9.4 billion (27% of assets) by FY2025. Since FPA is a development business, its contributions can fluctuate, but it turns capital around faster than REITs.
On Jan 26, Ho Bee Land announced it is acquiring a 181.36ha site in Moreton Bay, Queensland, for A$318.5 million.
Last year, Ho Bee acquired five sites, of which three (45.43ha) are in Queensland and two (39.35ha) are in Victoria, for A$96.6 million.
In its FY2024 annual report, Ho Bee Land says it handed over more than 600 land lots in Queensland and Victoria, driving a 30% increase in total revenue to A$277 million. “With a land bank of over 3,500 lots in the pipeline, our Australia operations will remain a key contributor to the group in the coming years,” says Ho Bee.
In the year ahead, if, as strategists and currency folks expect, the AUD strengthens, it may not be just developers in Australia that benefit, but also the likes of Keppel REIT and Suntec REIT. CICT could also narrow the valuation deficits of its Australian assets.
