Singapore REITs (SREITs) are seen as a safe haven when the yield curve flattens in a rising interest rate environment. Even amid market volatility, “the stars are aligned” for hospitality and office sectors, say DBS Group Research analysts Rachel Tan and Dale Lai.
“While the SREITs are not spared by the rising interest rate environment, it can still outperform in instances when the yield curve flattens, which we will see in 2H2022-2023. As such, despite the reopening plays having already done well YTD at 10%, we believe that the hospitality and office sectors will continue to shine on the back of improving fundamentals,” write the analysts on May 20.
Tan and Lai’s top picks are CapitaLand Integrated Commercial Trust (CICT) and Keppel REIT (KREIT) for office plays, and Ascott Residence Trust (ART) and CDL Hospitality Trusts (CDLHT) for hospitality.