“The underperformance in 2023 is likely to see some reprieve as rates ease off. Based on current level, the estimated yield from the REIT sector is at around 6.0% in 2023 and 6.2% in 2024 – this will start to look attractive once T-bills and other similar products start to adjust down in line with lower interest rates,” she adds.
Singapore companies that are focused on the domestic market as well as cash-rich companies may register growth in 2024, in contrast to companies that are heavily reliant on external demand. The latter are likely to face slower sales going into next year, says OCBC Investment Research (OIR) analyst Carmen Lee.
The property sector, which was negatively affected by the high rates, could enjoy a reprieve as rates are expected to fall in 2024. “In terms of valuations, both real estate and REIT sectors are trading at close to 10-year lows in terms of price-to-book (P/B),” says Lee.
