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Singapore returns to Phase 2:
Impact on S-REITs

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Singapore is back in Phase 2 (Heightened Alert) as authorities work to curb the sharp rise in Covid-19 transmissions in the community. This brings the economy back to a painful square one and S-REITs are not spared. However, we believe any downside is an opportunity to gain exposure to S-REITs at lower levels.

How to position in S-REITs

What does this mean for your portfolio?

The new curbs will hurt retail S-REITs the most as mall traffic tends to slow to a crawl especially when dine-ins are not allowed. Whereas the impact on the office and industrial subsectors are likely to be more muted – making these sub-sectors safe harbours in such uncertain times.

We like these:

Industrial S-REITs

Industrial S-REITs’ businesses are unlikely to be affected by the new curbs. We anticipate industrial S-REITs to be safe harbours in the immediate term given the strong rebound in DPUs on the back of acquisitions while organic growth has remained positive. We like MLT, MINT, ALLT and AIMS.

Prime Office S-REITs

The extended WFH arrangement may dampen office leasing demand, but we still expect CBD rents to rise in 2021, thanks to rebounding economy and a lack of new supply completions. We like KREIT and MCT as they are better positioned to attract new economy tech firms.

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