After nearly a decade of stagnant distributions, two structural tailwinds are converging, says Ng. Falling borrowing costs — with the three-month Singapore overnight rate average (Sora) down from around 4% to 1% — are directly reducing the sector’s largest expense, while sustained positive rental reversions across office, retail, industrial and data centre assets are lifting top-line revenues.
Singapore REITs are entering their first meaningful dividend growth cycle in nearly a decade, says Jefferies analyst Wilson Ng, who initiated coverage on 10 S-REITs in a June 3 note.
Five S-REITs have earned “buy” calls from Ng, while another five bear “hold” calls. Overall, Ng’s price targets imply an average 15% total return over the next 12 months, with Asia’s largest listed industrial REIT CapitaLand Ascendas REIT (CLAR) leading the pack as Ng’s top pick.
