In their Aug 26 report, the analysts are “increasingly constructive” on S-REITs given the tailwinds such as the declining Singapore overnight rate average (Sora), which have rekindled acquisition activity, further aided by a pick-up in equity fundraising. The Sora is currently at around 1.5% with funding costs at between 2.3% to 2.8%. S-REITs have raised about $2.4 billion so far.
“Spring has arrived [for S-REITs],” say DBS Group Research analysts Derek Tan, Dale Lai, Geraldine Wong and Tabitha Foo, adding that investors should continue to allocate more capital into the sector.
Despite the S-REIT index’s rise of around 5% since early August this year, the sector’s valuations remain “undemanding” at 0.9 times P/B and representing an FY2026 yield of 5.8% or -1 standard deviation (s.d.). Against the 10-year bond yields, the sector has a 4% yield spread.
