Singapore emerges as a global REIT hub

There are 42 S-REITs and property trusts listed with a market cap of over USD 80 billion.

With 42 S-REITs and property trusts listed totalling over USD 80 billion in market capitalisation, JLL says Singapore’s REIT market has matured into a global REIT hub. As of December 2021, over 85% of S-REITs and property trusts owned properties outside of Singapore across the globe. 

According to JLL, there are 17 S-REITs in which the real estate portfolios comprise entirely overseas properties. REIT sponsors include international asset managers such as Cromwell, Manulife and Lendlease. 

Here’s more from JLL:

In the last two months of 2021, the S-REIT market welcomed two key REIT listings: 

• 26 November 2021 - Daiwa House Logistics Trust listed on Singapore Exchange (SGX) with an initial market cap of USD 396 million. The USD 720-million portfolio consists of 14 logistics assets in Japan. Its sponsor, Daiwa House, is one of the largest construction and real estate development companies in Japan. 

• 6 December 2021 - Digital Core REIT listed on SGX with an initial market cap of USD 977 million. The portfolio consists of USD 1.4 billion worth of US data centres. Its sponsor, Digital Realty, is the largest owner, operator, developer and acquirer of data centres globally. It is also one of the ten largest USlisted REITs, with a market capitalisation of around USD 44 billion.

Including the above listings, Singapore REITs have invested a total of USD 11.6 billion in assets outside Singapore in 2021. A bustling REITs marketplace will bring in a more vibrant economy.

Mergers have also helped pave the way for more international acquisitions. Post-merger, CapitaLand Integrated Commercial Trust acquired USD 540 million of offshore assets. The proposed merger of Mapletree Commercial Trust and Mapletree North Asia Commercial Trust should equip the enlarged REIT with greater scale and capacity to grow more swiftly into China, Japan and Korea. We expect Singapore REITs outbound investments to exceed USD 12 billion in 2022. 

In a small and open economy like Singapore, where gross exports and imports of goods and services are more than 300% of GDP and domestic expenditure has a high import content, the exchange rate has more influence on inflation than the interest rate. As such, Singapore’s monetary policy is centred on managing the Singapore dollar (SGD) against a trade-weighted basket of currencies known as the Singapore dollar nominal effective exchange rate (S$NEER). In each review, changes can be made to the following: (i) the slope of the policy band (i.e., rate of appreciation), (ii) the width of the policy band, and (iii) the level at which the policy band is centred.

Amid rising inflation across the globe, it is likely that the Monetary Authority of Singapore (MAS) will adjust the slope upwards to allow the strengthening of the SGD against the S$NEER. When MAS allows the SGD to appreciate, SG 10Y bond yields tend to dip lower than US 10Y bond yields. This should help keep Singapore’s interest rates low, mitigating the impact of rising global rates on our REIT market and on real estate capital values.