Check Out The Best REITS In Singapore
Both affordable and accessible, REITs offer an opportunity for you to earn from large profitable properties without paying their full cost. The first REIT in Singapore was listed on the Singapore Stock Exchange in 2002, and since then, this type of investment has become a must-have for investors who want to enjoy low-risk and high dividends.
In recent years, REITs in Singapore outperformed their global peers. But with the wide array of REITs to choose from, making the right choice can seem overwhelming. If you are curious about the best REITs in Singapore, we’ve done the heavy lifting for you. Here’s what you need to know about it.
Here at OMY Singapore, you will discover the following:
What Is A REIT?
A Real estate Investment Trust, also called REIT, is a corporation that earns recurring income from the properties it manages and owns. REITs make money by collecting parking fees, storage fees, and rental fees from their tenants.
As Singapore is considered a property-obsessed nation, investing in a REIT offers its own merits, especially for those who want to diversify their wealth portfolio. Aside from that, these properties have also shown higher returns than inflation.
Benefits Of Investing In A REIT
There are several benefits when you choose to invest in a REIT. Here are some of the major benefits it offers:
Regular Dividend Earnings
REITs provide investors with regular and stable dividends. If you are looking for a way to earn passive income on a quarterly or semi-quarterly basis, you might want to consider investing in a REIT.
Most REITs have a good track record when it comes to capital appreciation. REITs are also usually well located in the areas with high demand in the market. This will give you a better chance of capital appreciation when you sell your REITs later on.
REITs are considered one of the most stable investment options in the market. The fact that there is a good demand for them keeps the prices stable as well.
Because REITs offer regular and stable dividends, it means it is less volatile compared to other investment vehicles.
Low Price Entry
If you want to invest in a REIT, you will not need to spend a lot of money. For example, you can purchase Singapore REITs through different brokers with a minimum investment of 1 lot or 100 units. So, if a REIT has a unit price of S$2, all you need is S$200 to generate profit.
Easy to invest
If you are looking for an investment that is easy to make and hassle-free, REITs are your best bet. It is easy to buy REITs since you can easily purchase them through multiple platforms. This makes investing in REITs accessible to many.
Most REITs have very high liquidity. It means that you can get your money anytime you want.
If you are looking for a way to diversify your portfolio, investing in REITs is a smart choice. If there is any sudden change in the market or the property industry, you can expect REITs to survive even during tough times.
Professional Fund Management
REITs usually have professional fund managers who help in the management and improvement of its properties. This means that investors will not need to be at the frontlines of the properties. As long as a REIT is investing in a good area, the value of the REIT will be on the rise.
What To Look For When Investing In REITS?
There are a few factors to consider when you are ready to invest in REITs. Here are some of the things you need to check first.
REITs are usually invested in areas where there is high demand. As such, it is important to check the demand of the area before you invest. If a certain REIT is investing in a location that is on the rise, it will help you earn dividends sooner than you expect.
Moreover, the location of REITs will also affect their occupancy rate, which is the ratio of available spaces for rental to the amount of space rented. Examining this will help you figure out the REIT’s cash flow, as well as management. For instance, if a REIT has an occupancy rate of 98%, it tells you that it is doing well, and you can expect to get a steady stream of dividends from it.
REITs are usually paid in dividends. However, it is important to check how many dividends are paid and how much investors get paid. It is also important to check if the REIT can make regular and scheduled payments to its investors.
A REIT’s profitability is usually measured by its rental income. If a REIT can sustain its rental income, it is most likely a profitable REIT.
When it comes to investing in any REIT, make sure to examine its property portfolio first. Take a look at all properties owned and managed by the REIT, as well as its locations. Then, assess whether or not these properties are diverse or steady enough. For example, a REIT that specialises in healthcare will always be relevant because people are constantly getting sick or needing medical care.
Net Asset Value
Net asset value or NAV refers to the net market value of the REIT’s assets, minus all its liabilities. To find out the NAV per unit, divide the NAV by the total units issued. You can use this to tell whether or not a REIT’s share is undervalued or overvalued. For example, if the NAV is below its share price, it’s a good investment.
The aggregate leverage is the amount of debt that a REIT can use. When the aggregate leverage is high, it means that the REIT can borrow more money. However, it is important to know that the higher the debt load, the more a REIT has to pay in interest. The aggregate leverage ratio limit in Singapore is 50%.
Most Common Types of REITs in Singapore
Here are the top 5 types of REITs you need to know.
Commercial REITs are considered one of the more conservative investments on the market. These REITs are mainly invested in high-quality commercial properties such as real estate properties that are primarily used for business purposes. This includes office spaces and hotels.
Healthcare REITs are invested in properties that are used in healthcare services such as retirement homes, hospices, and assisted living facilities. Because healthcare facilities are considered lucrative, investors can expect to earn regular dividends.
If you are looking for a more stable investment vehicle, you might want to consider investing in industrial REITs. Industrial REITs are invested in business facilities such as warehouses, distribution centres, and shipping terminals.
Retail REITs are invested in properties that are mainly used for retail purposes. This includes offices, shopping malls, and gyms. Because retail properties are considered a necessity by many businesses, it means that there will always be a demand for retail REITs.
Best REITs in Singapore
Below are some of the best top real estate investment trusts in Singapore. Take a look at this table to compare each REIT side by side.
|Dividend Yield||DPU||NPI||Aggregate Leverage Ratio||Net asset value per unit|
|Suntec REIT||5.21%||8.666||S$198.9 million||43.7%||S$2.055|
|Mapletree Logistics Trust||4.85%||8.787||S$490.78 million||38.4%||S$1.33|
|Mapletree Industrial Trust||5.54%||13.80||S$277.6||40.3%||S$1.66|
|Parkwaylife REIT||2.745||13.79||S$28.6 million||35.4%||S$2.37|
|Ascendas REIT||4.71%||15.25||S$920.8 million||35.9%||S$2.23|
|CapitaLand Integrated Commercial Trust||3.90%||10.03||S$248.3 million||37.2%||S$2.06|
|Frasers Centrepoint Trust||4.45%||12.085||S$34.6 million||36.1%||S$2.30|
|Keppel REIT||4.50%||9.851||S$28.81 million||38.4%||S$1.32|
1. Suntec REIT
|Aggregate Leverage Ratio||43.7%|
|Net asset value per unit||S$2.055|
Suntec REIT has retail and office properties both in Singapore, the UK, and Australia. Its most prominent properties in Singapore are Suntec City, Suntec Singapore Convention & Exhibition Centre, One Raffles Quay, Marina Bay Financial Centre Towers 1 and 2, and the Marina Bay Link Mall.
This REIT is managed by an external manager ARA Trust Management Limited which is focused on delivering stable and consistent distributions to unitholders, as well as delivering long-term growth to provide unitholders with a competitive return on their investment.
2. Mapletree Logistics Trust
|Aggregate Leverage Ratio||38.4%|
|Net asset value per unit||SS$1.33|
Another Singapore REIT that’s worth considering is the Mapletree Logistics Trust. This REIT has been showing consistent growth in its NPI, DPU, and revenue, which is remarkable considering most businesses were hit by the COVID-19 pandemic. According to this REIT’s 2020/21 report, it has over S$10.8 billion worth of assets under its management. Its occupancy rate is at a whopping 97.5%, and its total return is 27.4%.
This REIT has a very diverse portfolio, with more than 163 properties across various sectors such as consumer staples (17%), food beverage products (22%), electronics and IT (13%), materials construction & engineering (6%), and many others. This REIT is also present in countries such as South Korea, Hong Kong, Japan, China, and Singapore.
3. Mapletree Industrial Trust
|Aggregate Leverage Ratio||40.3%|
|Net asset value per unit||S$1.66|
This Industrial REIT comprises business park buildings, high-tech centres, data centres, and flattened factories, among many others. The tenants of this REIT are also diversified across sectors like information and communication, manufacturing, and financial and business services.
According to its 2020/21 report, its assets increased from S$5.9 billion to S$6.8 billion, mostly because of the acquisition of new properties in North America. With most employees and students stuck at home during the pandemic, the importance of data traffic and data centres saw a huge spike. Mapletree industrial trust dividend is currently at 4.68%.
4. Parkwaylife REIT
|Aggregate Leverage Ratio||35.4%|
|Net asset value per unit||S$2.37|
This REIT is famous for owning “atas” hospitals such as the Mouth Elizabeth Hospital, Parkway East Hospital, and Gleneagles Hospital. Aside from these properties in Singapore, they also own several nursing homes and medical facilities in Japan and Malaysia. Most of Parkwaylife’s assets are centred in Japan, and this REIT has also been acquiring new nursing homes and medical facilities in Japan over the years.
This REIT has 56 properties, with a total of around S$2.29 billion, and a huge occupancy rate of 99.7%. This doesn’t come as a surprise considering Japan is an ageing nation, and many people require medical attention, equipment, and medicine.
Considering this, Parkwaylife is a great REIT to have in your portfolio because the expected demand for healthcare in Japan is set to continue. Medical facilities will also be needed despite market performance because people will inevitably fall sick. Parkway REIT share price is currently at S$4.92.
5. Ascendas REIT
|Aggregate Leverage Ratio||35.9%|
|Net asset value per unit||SS$2.38|
Considered the first and biggest listed business space and industrial REIT in Singapore, investing in Ascendas REIT is a must. Just like other blue-chip REITs Singapore, its portfolio covers various countries and sectors. Across Australia, the United States, Europe, the United Kingdom, and Singapore, Ascendas REIT owns 200 commercial, industrial, and business properties. This REIT also shows growth in NPI, distribution income, and gross revenue.
Recently, Ascendas REIT has acquired new business centres, data centres, and logistics facilities in the US and Singapore. They have also been upgrading their assets.
6. CapitaLand Integrated Commercial Trust
|Aggregate Leverage Ratio||37.2%|
|Net asset value per unit||S$$2.06|
This is Singapore’s largest retail REIT with an impressive market capitalization of S$13.5 billion. Previously known as CapitaLand Mall Trust before merging with CapitaLand Commercial Trust in 2020, the combined retail portfolio of both corporations makes it one of the biggest REITs in the Asia Pacific regions.
This REIT owns numerous shopping malls such as IMM Building, Junction 8, Bugis+, Bugis Junction, and Tampines Mall. Included in its list of properties are integrated developments like Raffles City, Plaza Singapura, and Funan. They also have Grade A office buildings like Six Battery Road, Capita Green, and Capital Tower.
While most of their properties are retail, the work from home set up brought by the pandemic did not impact its malls and offices, which continue to see an increase in valuation and profitability. This is because this REIT boasts a great tenant portfolio, new retail and lifestyle offers, and diversified revenue channels.
7. Frasers Centrepoint Trust
|Aggregate Leverage Ratio||36.1%|
|Net asset value per unit||S$$2.30|
This is a retail real estate investment trust that owns many suburban retail malls in Singapore. This REIT focuses on financial management, asset management, and strategic management, with a primary focus on investing in income-producing properties in the country and abroad.
This REIT owns Northpoint, YewTee Point, Anchorpoint, Bedok Point, Causeway Point, and Changi City Point. Frasers Centrepoint Trust also owns and operates an office building called Central Plaza, which is a mixed development property with Tiong Bahru Plaza
8. Keppel REIT
|Aggregate Leverage Ratio||38.4%|
|Net asset value per unit||SS$1.32|
Keppel Capital is one of the largest REITs in Singapore. It manages grade-A commercial assets in pan-Asia. The objective of Keppel REIT is to generate stable and long-term income for its unit holders by investing in a portfolio filled with income-producing real estate and real estate-related assets in Singapore and pan-Asia.
With approximately S$9 billion assets under management in Singapore, as well as Seoul, Melbourne, Perth, and Sydney, investing in Keppel REIT is an incredible idea. In Singapore, its properties include Ocean Financial Centre, and Keppel Bay Tower. This REIT also has a one-third interest in Marina Bay Financial Centre (Towers 1, 2, 3, and the subterranean mall, and Marina Bay Link May, as well as a one-third interest in One Raffles Quay.
In Australia, Keppel REIT owns 50% interest in 8 Chifley Square and 100% interest in Pinnacle Office Park in Sydney. Additionally, this REIT also owns 50% interest in 8 Exhibition Street office building, as well as three adjacent retail units, and 50% interest in Victoria Police Centre, among many others. Its assets have a 95.4% occupancy rate.
A Word From OMY
Investing in REITs is one of the most profitable ways to diversify your portfolio. But just like other investments, make sure to scrutinise the REIT and check its track record to make sure that it is worth investing in.
Rest assured that the previous decade has shown that investing in REITs can be rewarding. It is a good idea to keep track of the current market trends and investment options so you can make the right decision.
Read: Complete Guide to Buying Your First HDB BTO Flat in Singapore