S-Reits with office assets average 27.6% return, Latest Business News - The New Paper

S-Reits with office assets average 27.6% return

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The top three performing Singapore real estate investment trusts (S-Reits) that own office assets here averaged a total return of 27.6 per cent in the first half of this year, bourse operator Singapore Exchange (SGX) said yesterday.

Of the 34 SGX-listed Reits, 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties in Singapore, Malaysia, South Korea, Australia, Europe and the US.

These 10 office Reits have a combined market capitalisation of more than $30 billion, and six of them own Singapore office assets. The six are CapitaLand Commercial Trust, Mapletree Commercial Trust, Suntec Reit, Keppel Reit, Frasers Commercial Trust and OUE Commercial Reit.

The three best performers out of the six by return were Mapletree Commercial Trust (29.9 per cent), CapitaLand Commercial Trust (26.9 per cent) and Frasers Commercial Trust (26 per cent).

Suntec Reit and Mapletree Commercial Trust also have commercial and retail assets in their portfolios.

The office market in Singapore, which bottomed out in the first half of 2017, is in its second year of recovery, and office rentals will likely continue rising amid tapering supply, according to a May 30 report by UOB Kay Hian Research.

The occupancy rate for Grade A office space in the core Central Business District (CBD) has seen a V-shaped recovery, rebounding to a healthy 95.2 per cent in the first quarter of this year from the trough of 91.6 per cent in the third quarter of 2017.

New supply of core CBD office space in Singapore is estimated at 5.33 million sq ft between this year and 2022, representing an average of 1.36 million sq ft per year, 29 per cent below the 10-year average of 1.91 million sq ft, the report added.

Likewise, in a June 21 report, Colliers International projected that rents for Grade A office buildings in the CBD will increase by 8 per cent this year and 5 per cent next year. - THE STRAITS TIMES