OCBC upgrades the S-REIT sector to Overweight from Neutral; says going into 2011, “the persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher.” 

Coupled with hot capital inflows pouring into Asia, says it’s likely that spot rental rates and asset prices will continue to be inflated. “At the same time, many REIT managers are capitalizing on the recovery cycle for further asset enhancement initiatives and acquisitions.” 

Expects investors’ interest in S-REITs to remain piqued in 2011, being an inflation hedge, but says different sectors may experience different rates of recovery; says “the recovery is likely to be more pronounced for the office sector, followed by the industrial sector,” while retail is likely to remain subdued next year. 

 

Preferred picks among large-caps are Mapletree Logistics Trust (M44U.SG), Buy with $1.00 fair value, Ascendas REIT (A17U.SG), Buy, $1.38 fair value.