Beginner's Guide: How to Invest in REITs in Singapore
What Are Real Estate Investment Trusts (REITs)?
REITs are real estate investment trusts, which are financial products that allow you to invest in a portfolio of properties without having to buy or manage them yourself. These properties can include malls, office buildings, data centers, and hotels. REITs generate income by leasing their properties to tenants, which creates a steady stream of dividends for shareholders. Making them a popular choice for generating passive income.
In Singapore, REITs are legally required to pay 90% of profits back to investors as dividends.
Types of REITs in Singapore
REITs may be a smart way to invest in real estate without having to buy or manage properties yourself. Generally speaking, there are 7 types of REITs, each with its unique focus.
Diversified REITs
These REITs own and manage a variety of property types, such as office and retail real estate.
Healthcare REITs
With medical inflation on the rise, healthcare REITs could be an interesting investment choice. They focus on investing in hospitals, medical centers, nursing homes, and retirement homes.
Hospitality REITs
If you're interested in the hospitality industry, hospitality REITs may be right for you, as they offer a lower-cost option for investing in commercial real estates like hotels or resorts.
Industrial REITs
Boasting historically competitive total returns and low relevance to other assets, industry REITs focus on industrial-related properties like warehouses and distribution centers. Notably, they also play a vital role in the e-commerce field.
Office REITs
Office REITs invest in office buildings and generate revenue by renting out office space with long-term leases.
Residential REITs
As their name tells, residential REITs own and manage rental apartment buildings and build houses for families.
Retail REITs
Retail REITs invest in shopping malls and freestanding retail. Despite the substantial impact of rising e-commerce sales on the retail sector, certain segments of the industry are relatively resilient to disruption due to the unique nature of their products or services, exhibiting a level of immunity to the negative effects of e-commerce that cannot be easily replicated in the digital realm.
Why Should You Try REITs Investing in Singapore?
Now that we've understood what REITs are, let's move on to another question: what are the benefits of REITs investing?
Regular tax-free dividend income
REITs typically distribute at least 90% of taxable income back to investors, which is usually done on a regular basis, quarterly or semi-annually. The dividends generated from investing in REITs are owned by the individual investor and can provide a reliable source of passive income. In addition, unlike other investments where you may accrue earnings that must be taxed, REIT dividends belong solely to you.
Low Entry Barriers
Cost-effective and convenient, REITs investing offers participants to enjoy the growth potential of the property market. Different from physical property purchasing, which calls for huge cash amounts, it requires a smaller investment, making it accessible to a broader range of investors.
Readily Tradable Assets
Known as readily tradable assets, REITs provide investors with higher liquidity compared to owning physical real estate assets, making it much easier for investors to convert their investments into cash when needed.
Portfolio Diversifications
REITs provide diversification for investment portfolios by spanning various property types, including commercial, industrial, residential, and hospitality sectors. More importantly, the different risk-return performance of REITs from equities and bonds is also expected to offer portfolio diversification opportunities for investors.
Professional Management
REITs are managed by qualified experts who handle operational matters, tenant relations, and property management. In such cases, investors can rely on the experience and expertise of professionals to manage their investments, mitigating the risks and challenges associated with owning physical properties.
Potential Appreciation
When the economy is doing well, REITs tend to perform well as property prices increase. This results in the assets held by REITs appreciating, which leads to the share prices of REITs moving upwards. Furthermore, as asset prices increase, REITs are also able to charge higher rents on their properties, which generates higher income for shareholders.
However, REITs are not ten out of ten assets. Like any investment, there are risks involved with investing in REITs. For one thing, the value of your investment can go up or down, and you may lose money sometimes. For another, REITs are subject to the same risks as other real estate investments, such as changes in the real estate market, interest rates, and tenant demand. In addition, REITs often grow at a slow pace as compared to speculative assets such as technology stocks, which may not meet the requirements of investors who are seeking high-return assets within a short period.
What Are the Top 3 Best Performing S-REITs in Singapore for the First Three Quarters in 2023?
As we move into the year 2023, Singapore's REIT market is expected to continue providing income opportunities to investors. In this part, 3 best performing Singapore REITs for the first three quarters are introduced, with their dividend history from FY2018 to FY2022 (as of 10 November 2023) explained, including Keppel DC REIT(30.4%), CapitaLand India(10.4%) and Mapletree Logistics Trust(9.9%).
Keppel DC REIT (SG:AJBU)
Listed on the Singapore Exchange on 12 December 2014 as the first pure-play data centre REIT in Asia, Keppel DC REIT is committed to principally investing in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate and assets necessary to support the digital economy. It is managed by Keppel DC REIT Management Pte. Ltd. (the Manager) and is sponsored by Keppel, a global asset manager and operator with strong expertise in sustainability-related solutions spanning the areas of infrastructure, real estate, and connectivity.
Well known for its high occupancy rate of 98.5% for around 8 years, Keppel DC REIT has achieved a significant yearly increase of 30.4% by the end of September this year.
-- Distribution History --
#The above information Distribution Per Unit in Singapore Cents, source from Distribution Information | Keppel DC REIT
CapitaLand India (SG:CY6U)
Formerly known as Ascendas India Trust, CapitaLand India was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in August 2007 as the first Indian property trust in Asia. CLINT is managed by CapitaLand India Trust Management Pte. Ltd., formerly known as Ascendas Property Fund Trustee Pte. Ltd. As at 12 May 2023, CLINT’s assets under management stand at S$2.7 billion.
CLINT’s portfolio includes nine world-class IT business parks, one logistics park, one industrial facility and four data centre developments in India. CLINT is focused on capitalising on the fast-growing IT industry and industrial/logistics asset classes in India, as well as proactively diversifying into other new economy asset class such as data centres.
-- Distribution History --
#The above information Distribution Per Unit in Singapore Cents, source from CapitaLand India Trust - Distribution History
Mapletree Logistics Trust(SG:M44U)
Listed on the Singapore Exchange Securities Trading Limited in 2005, Mapletree Logistics Trust (MLT) is Singapore’s first Asia-focused logistics real estate investment trust, with its investment covering a diversified portfolio of quality, well-located, income-producing logistics real estate in Singapore, Hong Kong SAR, Japan, China, Australia, South Korea, Malaysia, Vietnam, and India. As of November 10th, 2023, Mapletree Logistics Trust has a market cap of S$7.63 billion.
In terms of its distribution policy, distributions will be paid quarterly for the periods ending 31 March, 30 June, 30 September, and 31 December each year.
-- Distribution History --
#The above information Distribution Per Unit in Singapore Cents, source from www.mapletreelogisticstrust.com
What Are the Top 3 Largest Cap S-REITs Based on Sectors in Singapore in 2023?
As at the end of February 2023 from SGX S-REIT March 2023 Chartbook, CapitaLand Integrated Commercial Trust ranked first in terms of market cap, boasting a large market cap of S$12.9 billion, followed by CapitaLand Ascendas REIT, with a market cap of S$11.6 billion. Mapletree Commercial Trust achieved the third place, holding a market cap of S$9.0 billion.
CapitaLand Integrated Commercial Trust(SG:C38U)
CapitaLand Integrated Commercial Trust (CICT or the Trust) is the first and largest real estate investment trust (REIT) listed on Singapore Exchange Securities Trading Limited (SGX-ST) with a market capitalisation of S$13.5 billion as at 31 December 2022. It debuted on SGX-ST as CapitaLand Mall Trust in July 2002 and was renamed CICT in November 2020 following the merger with CapitaLand Commercial Trust (CCT).
CICT owns and invests in quality income-producing assets primarily used for commercial (including retail and/or office) purposes, located predominantly in Singapore. As the largest proxy for Singapore commercial real estate, CICT’s portfolio comprises 21 properties in Singapore, two properties in Frankfurt, Germany, and three properties in Sydney, Australia with a total property value of S$24.2 billion based on valuations of its proportionate interests in the portfolio as at 31 December 2022.
-- Distribution History --
#The above information Distribution Per Unit in Singapore Cents, source from Investor Relations: Distribution History
CapitaLand Ascendas REIT（SG:A17U）
Listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in November 2002., CapitaLand Ascendas REIT (CLAR) is Singapore’s first and largest listed business space and industrial Real Estate Investment Trust (REIT). As a global REIT anchored in Singapore, CLAR has long focused on tech and logistics properties in developed markets.
Currently, CapitaLand Ascendas REIT is listed on several indices, including the FTSE Straits Times Index, the Morgan Stanley Capital International, Inc (MSCI) Index, the European Public Real Estate Association/National Association of Real Estate Investment Trusts (EPRA/NAREIT) Global Real Estate Index and Global Property Research (GPR) Asia 250. As of November 10th, 2023, CapitaLand Ascendas REIT has a market cap of S$11.81 billion.
In terms of its distribution policy, distributions are paid semi-annually (estimated distribution payment in March/September). Before FY14/15, distributions were made quarterly.
-- Distribution History --
#The above information Distribution Per Unit in Singapore Cents, source from CapitaLand Ascendas REIT - Distribution
Mapletree Pan Asia Commercial Trust (SG:N21U)
As a Singapore-focused REIT in a diversified portfolio of income-producing real estate for office and/or retail purposes, Mapletree Commercial Trust is listed on the SGX-ST on 27 April 2011, known as the third REIT sponsored by Mapletree Investments Pte Ltd. MCT is established with the principal investment objective of investing on a long-term basis in a diversified portfolio of income-producing real estate used primarily for office and/ or retail purposes in Singapore, as well as real estate-related assets. As at 31 March 2021, MCT’s portfolio comprised five properties located in Singapore.
It is worth noting that as early as 2022, Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) announced a mega S$4.2 billion merger. The new entity that was created by this marriage was named Mapletree Pan Asia Commercial Trust (SGX: N2IU), or MPACT.
-- Distribution History --
#The above information Distribution Per Unit in Singapore Cents, source from www.mapletreepact.com
How to Invest in Singapore REITs
Moomoo can support you in investing in REITs. After you download the moomoo app, you can simply navigate to the 'Markets' tab before clicking on the 'REITs' icon. This will bring you to the page, as seen in the screenshot below, where you will be able to look at a whole list of REITs that you can potentially invest in.
Images provided are not current and any securities are shown for illustrative purposes only.
You will then be able to click on any of the REITs shown to access more details, such as its historical price movements, net capital movements, comments, news, and financial overviews of the company, as seen below.
Images provided are not current and any securities are shown for illustrative purposes only.
All in all, REITs may be a valuable type of investment for potential source of passive income. Alternatively, REITs may be included for diversification of assets purposes, which may provide a reasonable level of stability.
Source
[1]https://www.reitas.sg/singapore-reits/overview-of-the-s-reit-industry/#sub-sector
[2]https://www.google.com/finance/quote/M44U:SGX?sa=X&ved=2ahUKEwiwrvXZkbz7AhUWSGwGHSbpCjMQ3ecFegQILRAg
[3]https://www.google.com/finance/quote/ME8U:SGX?sa=X&ved=2ahUKEwilyPPckbz7AhXjSGwGHZ_bDawQ3ecFegQILhAg
[4]https://www.google.com/finance/quote/HMN:SGX?sa=X&ved=2ahUKEwiimsyUk7z7AhUTDLcAHTgnAjEQ3ecFegQILxAg
[5]https://time.com/6222645/us-recession-forecast/#:~:text=The%20latest%20recession%20probability%20models,period%20in%20the%20previous%20update.
[6]https://www.google.com/finance/quote/K71U:SGX?sa=X&ved=2ahUKEwjaq5yJlbz7AhXo3jgGHQ3VDd0Q3ecFegQILxAg
[7]https://www.keppelreit.com/property-portfolio/#singapore
[8]https://www.google.com/searchrlz=1C1BNSD_enSG930SG930&sxsrf=ALiCzsZDBKmYhHPPLMyhQTsbu5gNHuLrdg:1668927648048&q=SGX:+J69U&stick=H4sIAAAAAAAAAONgecRozi3w8sc9YSm9SWtOXmPU4OIKzsgvd80rySypFJLiYoOyBKT4uHj00_UNDZPis9OTqJ5FrFyBrtHWCl4mVmGAgCPfUm5SAAAAA&sa=X&ved=2ahUKEwjCl_j8l7z7AhV1wjgGHZ5aCFoQsRV6BAhaEAM&biw=1920&bih=937&dpr=1
[9] https://dollarsandsense.sg/s-reits-report-card-2023-singapore-reits-performed-3rd-quarter-2023/