SINGAPORE (May 18): Maybank Kim Eng is recommending industrial S-REITs (Singapore REITs) over office and retail S-REITs with Ascendas REIT being its top pick. This comes as the overall supply of industrial properties looks to be tightening next year, especially for business parks.

Still 2016 is going to be “tough all over: retail, office, or industrial,” according to lead analyst Joshua Tan in a Tuesday report. But the supply story is expected to “brighten” for industrials in 2017, ahead for the two other sectors.

Tan also singles out Mapletree Industrial Trust and AIMS AMP Capital Industrial REIT as “buys” as the two should see new assets next year, giving them higher DPU growth visibility ahead.

He is however negative on retail S-REITs mainly on valuation grounds: Priced too high for too little growth. “What surprises us is that the pickup in visitor arrivals is not having a visible effect on Orchard malls,” says Tan.

Tan is also cautious on office S-REITs with the upcoming supply deluge which is expected to have a more profound effect on Grade A properties in non-prime locations.

As at 11.40am, Ascendas REIT is trading at $2.30 while Mapletree Industrial Trust and AIMS AMP Capital Industrial REIT are trading at $1.60 and $1.39 respectively.