Singapore REITs supported by falling rates and renewed fundraising

Underlying rental growth sustains REIT momentum.

Singapore real estate investment trusts (S-REITs) are operating in what is described as a “more conducive environment” as lower interest rates and stronger rental growth restore investor appetite.

According to DBS Group Research, the sector has risen about 5% since early August, but valuations remain below historical averages. DBS notes that S-REITs are trading at 0.9 times price-to-book with a forecast FY26 yield of 5.8% offering a 4% percent spread over 10-year Singapore government bond yields.

Rising share prices and lower interest rates have reopened the window for S-REITs to pursue acquisitions and fundraising. So far in 2025, they have raised $3.4b in equity through placements and IPOs, and announced nearly $2.0b in acquisitions. With some trading above NAVs, asset recycling is back in focus, signalling a return to the sector’s growth cycle.

DBS also noted a strengthening in underlying rental reversions across most real estate subsectors in the first half of 2025.

Retail is expected to stay resilient in 2025, supported by government-issued SG60 and CDC vouchers worth $600–$800 each. These benefit 1.33m households, or nearly 3m Singaporeans, with spending flowing mainly to heartland shops and supermarkets, boosting suburban landlords.

Office S-REITs surprised on the upside, reporting rental reversions of 7%–8%. This momentum is likely to carry into H2 2025 and 2026 as Grade A CBD and shadow space are gradually absorbed, pushing vacancies down from the current 5.2% and supporting further rental growth.

Industrial S-REITs also delivered strong rental reversions, mostly in the mid-teens, driven by wide leasing spreads. Whilst these may ease over time, DBS expects it to stay positive. Logistics S-REITs, however, are seeing some moderation as new supply comes onstream.

Hospitality S-REITs saw softer results in H1 2025, reflecting high base effects, supply competition, and tourist downtrading, especially in upscale and luxury hotels. Even so, operators expect improvement in 2H25, supported by seasonality, suggesting the H1 2025 weakness is unlikely to persist.

DBS projects that distributions per unit will grow by 1.1%in FY25 and 3.5% in FY2026, underpinned by lower financing costs and positive rental trends.

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