S-Reits poised for resurgence with upcoming IPO pipeline

Sector expected to attract fund flows again, with US Fed's anticipated rate cut in Sept

- Angela Tan

Singapore's real estate investment trusts (S-Reits) are poised for a resurgence even as the sector is set to grow with an upcoming initial public offering (IPO) pipeline featuring data centres, hospitals and new economy assets.

Mr Matthew Song, head of capital markets at the Singapore Exchange (SGX), said he was confident that the S-Reits sector would attract fund flows again with the US Federal Reserve expected to cut its key policy rate from September.

Lower interest rates typically alleviate pressure on borrowing costs and support a recovery in distribution per unit (DPU) and growth.

"We are confident asset owners and managers will look to reallocate capital back to our S-Reits market," Mr Song said in his welcome address at an S-Reits outlook seminar organised by the Bank of Singapore and SGX on Aug 29.

Since Singapore's maiden Reit listing in 2002, SGX has had more than 50 Reit and property trust IPOS. Following delistings and consolidations, the industry now has 39 actively traded trusts listed on SGX with a combined market capitalisation of $90 billion, representing 13 per cent of Singapore's overall listed market.

More than 90 per cent of the SReits own properties outside Singapore, and are well diversified across different sub-sectors like office, retail, industrial, healthcare, hospitality and data centres.

The Reit universe has expanded beyond the traditional property sectors to include assets supporting the new economy, such as logistics warehouses and green buildings.

Singapore's financial stability and regulatory environment have made the city a leading private banking and wealth management hub, attracting the rich and family offices that manage their wealth, Mr Song said.