Singapore’s REITs in free fall

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FTSE ST REITReal Estate Investment Trusts, or REITs, listing at the Singapore Stock Exchange have heavily fallen in value over the past months as investors pull out their money from the formerly popular investment instruments.

The FTSE REIT index is down 22 per cent since its peak in May 2013 and has “further room to fall,” analysts say, as the time of persistent low rates and easy money from quantitative easing seems to be over soon.

REITs have made up the lion’s share of Singapore’s IPOs in 2013 and were very sought-after investments products at relatively moderate risk but dividend payouts of up to 7 per cent.

However, even though the sell-off has left Singapore’s REITs fairly valued and their yield spreads over Singapore government bonds within average ranges, it’s not the time to buy, analysts say, as prices have not stabilised yet.

It is expected that prices could fall further, probably 12 per cent from current levels if the 10-year Singapore government bond’s yield rises to its 10-year high of 3.60 per cent.

Singapore REITs’ loss of popularity may dent the Singapore Exchange’s hopes for attracting more IPOs. Out of the $4.3 billion raised in IPOs so far this year, $2.75 billion is from REITs and property trusts.

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Reading Time: 1 minute

Real Estate Investment Trusts, or REITs, listing at the Singapore Stock Exchange have heavily fallen in value over the past months as investors pull out their money from the formerly popular investment instruments.

Reading Time: 1 minute

FTSE ST REITReal Estate Investment Trusts, or REITs, listing at the Singapore Stock Exchange have heavily fallen in value over the past months as investors pull out their money from the formerly popular investment instruments.

The FTSE REIT index is down 22 per cent since its peak in May 2013 and has “further room to fall,” analysts say, as the time of persistent low rates and easy money from quantitative easing seems to be over soon.

REITs have made up the lion’s share of Singapore’s IPOs in 2013 and were very sought-after investments products at relatively moderate risk but dividend payouts of up to 7 per cent.

However, even though the sell-off has left Singapore’s REITs fairly valued and their yield spreads over Singapore government bonds within average ranges, it’s not the time to buy, analysts say, as prices have not stabilised yet.

It is expected that prices could fall further, probably 12 per cent from current levels if the 10-year Singapore government bond’s yield rises to its 10-year high of 3.60 per cent.

Singapore REITs’ loss of popularity may dent the Singapore Exchange’s hopes for attracting more IPOs. Out of the $4.3 billion raised in IPOs so far this year, $2.75 billion is from REITs and property trusts.

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