Singapore REITs – Determining A REITs True Performance

| May 27, 2013 | 0 Comments

singapore reit investment The first ever REIT to arrive on the Singapore REIT market was CapitaMall Trust which came into existence almost a decade ago. Since then, CapitaMall has continued to dictate terms within the Singapore REIT market and with a current market value of about $7.4b is considered to be at the top of the food chain.

Since the start of the Singapore REIT market, 22 more REITs have been added to the list. However, this list will increase as soon as the Mapletree Greater China Commercial Trust will be added to the list. This REIT is essentially a subsidiary of Mapletree Investments. The present list which officially contains 22 REITs offers a unique mix of real estate categories ranging from healthcare to residential as well as retail and industrial. Since the Singapore REIT market contains REITs from every sector of real estate, they have their very own index which tracks their performance. This index is known as FTSE ST REIT Index. Less than five years ago, this index was stable at about 776 points. However, now, it has a value of 824 which means that in the last five years, it has only increased by about 7 percent. When keeping this in mind, it may seem strange why investors are still flocking towards Singapore REITs.

Here is what you need to know in order to understand the above paradox: The magic word here is dividends. Since REITs are subject to favourable tax treatment, they are bound by governmental authorities which in this case are the Monetary Authority of Singapore (MAS) to payout 90 percent of their profits to shareholders. Therefore, for most shareholders, an REIT is a good way of ensuring income as well as being able to experience a moderate amount of capital gains in the long run.

For example, Ascendas REIT – which has been around for almost five years now – has a market value of about $5.7b which also means that they are the second biggest REIT in Singapore. Within their portfolio, they have more than one hundred properties situated throughout Singapore. But if you consider the performance of this particular REIT, you will notice that in the last five years, their share value has gone down from about $2.34 to $2.06. The return on investment, however, for this REIT has been about 35% including dividends.

Category: REITs

About the Author ()

John Tan has been Vice President of BlueTrust Investments Corporation for 6 years since the mid-90’s. He has since moved on, to be a professional full-time trader.

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