Outlook for Singapore office landlords bullish as office demand, rental recovery have outstripped expectations, while potential for higher capital values has improved with low interest rates, ample liquidity underpinning prospect of acquisitions by REITs, says Deutsche Bank.

Deutsche Bank notes Singapore office rents inexpensive vs those in other financial centers, still more than 50% below 2007 levels. Says after falling close to 60% over past six quarters, rents bottomed out in 1Q10, now on firm uptrend, driven by financial institutions' expansion.

“We expect the strong interest for office assets to continue, especially from REITs and private equity funds, and more transactions to be completed, with upside scope for asset prices.”

Favourite stocks include Keppel Land (K17.SG), Suntec REIT (T82U.SG), CapitaCommercial Trust (C61U.SG).