S-REIT dividends seen rising 2.5% in 2026, analysts say

DBS flags 0.9x book and a 3.7-pt yield gap as refinancing-driven gains loom.

Singapore real estate investment trusts (S‑REITs) are expected to enter a two-year earnings upgrade cycle in 2026–2027, driven primarily by low domestic interest rates that reduce borrowing costs and support higher distributions per unit (DPU), according to DBS analysts.

The three-month Singapore Overnight Rate Average (3M SORA) is expected to remain anchored at 1.2%–1.3%, well below levels seen in 2022–2024.

DBS forecasts that refinancing of expiring debt will be a key earnings driver for S‑REITs. With low base rates, trusts can replace maturing loans with cheaper financing, boosting net property income and distributable income.

“This is expected to drive a 2.5% uplift in DPUs, which we believe is not yet fully priced in, leading to improved net property income and distributable income, and subsequent upgrades to internal projections and market consensus forecasts.

Certain REITs, including CDL Hospitality Trusts, OUE REIT, Lendlease Global Commercial REIT, ESR-LOGOS REIT, and Far East Hospitality Trust, could potentially achieve 4%–8% increases.

RHB Securities has earlier maintained an Overweight rating on Singapore REITs, citing falling domestic interest rates, resilient income growth, and ongoing capital-market activity as key drivers for sector performance.

It specifically noted that office and industrial REITs are likely to benefit the most, reinforcing DBS’s sector preference outlook.

Meanwhil, CGS International observe that S‑REITs are currently showing flat year-on-year DPU growth in the latest reporting season as the market prices in optimism around US rate cuts.

CGS added that some REITs, particularly industrial trusts with strong occupancy and rental reversions, are poised to outperform, suggesting that the full benefits of low Singapore interest rates have not yet been reflected in current valuations.

Despite these tailwinds, DBS analysts said S‑REITs remain undervalued.

The sector currently trades at around 0.9x forward book, with FY26 yields near 5.7%, implying a spread of nearly 3.7 percentage points over Singapore 10-year government bonds.

DBS also projected potential 15% price upside as yields normalize and refinancing benefits are priced in.