Analysts pointed to hospitality and industrial Reits among their preferred sectors on the back of easing supply.AFTER a good run this year, S-Reits are likely to remain in vogue amid a more dovish Federal Reserve and room for further growth.
"With rate hikes behind us, coupled with a Fed pro-growth stance, we believe there is further momentum to bring S-Reits prices higher," DBS analysts Mervin Song, Derek Tan and Carmen Tay wrote in a research note last week. Acquisitions could also prove to be a catalyst, as a conducive cost of capital could lead Reits to seek accretive buys.
Last year, while total returns for the FTSE ST Reit Index was negative to the tune of 3.7 per cent, the index still performed better than the STI and MSCI Singapore Index which returned -6.5 per cent and -7.6 per cent respectively. Across the sectors, OCBC is most bullish on retail, pointing to the quality of assets held by Singapore retail Reits as well as management strength and ongoing efforts to rejuvenate precincts such as Orchard Road.
Overall DPU growth is expected to be"relatively stable", clocking 1.9 per cent in FY19 and 2.4 per cent in FY20, vis-a-vis 1.2 per cent historically, going by the Bank of Singapore's forecasts for the 24 Reits it covers. One top buy for Maybank is Ascendas Reit."We expect rising overseas exposure to offset lower Singapore contributions in the near term," he said."We continue to favour its scale and see it as the best proxy for a recovering industrial sector, given its concentrated business park and high spec portfolio."
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