In a dramatic turn of events, Singapore Real Estate Investment Trusts (S-REITs) closed November 2024 with a stark contrast to global peers, recording a total return of -4.8%, compared to the FTSE EPRA Nareit Developed Index’s robust 11.1%. The disparity underscores the challenges and opportunities facing S-REITs amidst shifting investor sentiments and evolving market dynamics.
Institutional Outflows vs. Retail Inflows: A Tale of Two Markets
Between September and November 2024, institutional investors unloaded a net S$545.9 million worth of S-REITs, reflecting cautious positioning amid macroeconomic uncertainties. In stark contrast, retail investors showcased bullish confidence, scooping up a net S$557.3 million during the same period. The divergence signals differing outlooks between professional and individual market participants.
Active Portfolio Management Drives Transactions
S-REIT managers continued their aggressive push for portfolio optimization, announcing 10 transactions in Q4 so far—split evenly between five acquisitions and five divestments. These moves are part of a broader strategy to capture growth opportunities. Notably, several S-REITs expanded into new market segments, signaling bold steps toward diversification and long-term resilience.
Hospitality S-REITs Show Strength Amid Tourism Revival
As tourism normalizes following a post-pandemic travel surge, hospitality-focused S-REITs reported stable operating performance in Q3 2024. Revenue per available room (RevPAR) remained resilient, supported by sustained demand. While growth has moderated from the record highs of 2023, the steady metrics highlight the enduring appeal of Singapore’s hospitality sector.
Best Quarter Since 2020 Sets the Stage for Growth
Q3 2024 was a standout period for S-REITs, buoyed by improved investor sentiment over potential interest rate pivots. The iEdge S-REIT Index soared 14.7%, marking its best quarterly performance since its inception in 2010. All 31 constituents of the index ended higher, with US office S-REITs leading the charge.
Upcoming Earnings: What to Watch
Nearly three-quarters of S-REITs have confirmed schedules for their financial results or business updates for the period ending September 30, 2024. As the sector continues to attract attention, it ranks among the top four for net institutional inflows since mid-year.
Looking Ahead
As 2024 approaches its conclusion, S-REITs face a complex landscape. While headwinds remain, including institutional outflows and global economic uncertainties, the sector’s adaptability and resilience—particularly in hospitality and portfolio management—suggest promising opportunities ahead. The forthcoming earnings season will likely offer crucial insights into how S-REITs navigate these challenges and capitalize on emerging growth avenues.
Thank you
