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Some office and retail S-REITs could rebound, but expect a 'fear of recession' ahead: DBS

Jovi Ho
Jovi Ho8/29/2022 11:17 AM GMT+08  • 6 min read
Some office and retail S-REITs could rebound, but expect a 'fear of recession' ahead: DBS
“Despite reopening plays doing well year-to-date, up 10%, we believe the hospitality and office sectors will continue to shine.”
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Higher inflationary pressures and interest rates have been the key bugbears for Singapore REITs (S-REITs) in the first half of the year. DBS Group Research analysts see brighter days ahead as S-REIT managers have taken steps to mitigate these pressures.

“With real estate fundamentals for most sectors remaining firmly in landlords’ favour in 2H2022, we believe these impacts are factored in, with improved clarity in the overall SREITs’ distribution per unit (DPU) growth profile of 6.0% over FY2022-2024,” write DBS Group Research analysts Derek Tan, Rachel Tan, Dale Lai and Geraldine Wong.

With S-REITs now offering a FY2023 yield spread of 3.5%, DBS believes that stocks offering superior growth will continue to outperform.

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