S-Reits now cheap with upside potential, worst is over, say Eastspring, OCBC

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THE market looks to be pricing in too much downside for retail and office Singapore-listed real-estate investment trusts (S-Reits), said Eastspring Investments’ head of client portfolio managers, Adam Matthews, and the company's director of client portfolio managers, Sarah Lien. Read more at The Business Times.

In Singapore, Eastspring is focusing on valuations and acquiring high-quality assets at discounted prices.

As for the retail segment, malls in Singapore tend to be destinations for families on evenings and weekends, and families are likely to spend more money locally over the next six month because of travel restrictions still in place, said Eastspring. Furthermore, most Singapore real estate businesses are still paying dividends, even though some have reduced their payouts. Today, the dividend yield on S-Reits averages 4.5 per cent, which Eastspring believes is attractive, relative to the global developed real-estate market with a 3.7 per cent dividend yield and MSCI's flagship global equity index, the MSCI ACWI Index, yielding 2.7 per cent.

OCBC will adopt a “balanced approach” towards investing in S-Reits. It recommends that investors stick with some of the winners, such as those exposed to the sub-sectors of logistics and business parks, as well as S-Reits that have positioned themselves defensively in anticipation of a weaker outlook.

 

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