DBS bullish on REIT outlook as tourism sector recovers and economy reopens

With global tourism recovering, more visitors arriving, and more events coming to Singapore, the services sector will rebound strongly, including hotels, restaurants, airlines and tourism-related sectors.

DBS is bullish that Singapore Real Estate Investment Trusts (S-REITs) will continue to benefit from the reopening of the economy, with a compound annual growth rate (CAGR) in dividend per unit (DPU) averaging 8% over the next two years.

In its Q3 2022 investment outlook report on July 05, DBS made was most bullish on hotel and office REITs, with hotel REITs in particular expected to grow at a compound annual growth rate of 30% per unit over the next two years.

Although cost pressures such as utilities and financing are rising, S-REITs are sufficient to absorb these cost pressures. Most of them have gearing ratios in the region of 45%. In addition, due to rising market demand, hotels can charge higher rates.