Unitholders of REITs are likely to cheer the Budget – for something that wasn’t announced.

In contrast to last year when the government urged landlords to provide relief to their tenants grappling with the crisis, there was no such measure announced by Deputy Prime Minister Heng Swee Keat in his Budget 2021 speech.

As such, the distributable incomes of the REITs, held low by rental relief, could rebound. In particular, retail REITs and industrial REITs with SME tenants could stand to benefit. 

"Coupled with the expected economic recovery, this could still help support occupier demand for real estate in Singapore, and pave the way for most sectors of Singapore’s property market to bottom in 2021 and potentially recover in 2022," notes Tay Huey Ying, Head of Research & Consultancy at JLL. 

Meanwhile, shareholders of banks are set for less worry.


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With forbearance loans - which are not part of the special allowances - down to low levels, there could be more clarity on credit costs.

However, banks tend to set aside more gross provisioning depending on their macro economic variable (MEV) models.

With government support for jobs and businesses, and with the vaccine giving rise to herd immunity, an economic rebound would cause banks to set aside lower general provisions. 

Already, Piyush Gupta, CEO of DBS Group Holdings has said his bank's credit costs have likely peaked and could amount to just $1 billion over the next 12-18 months compared to the $3.07 billion taken in FY2020. This alone would boost net profits by $2 billion. DBS announced a net profit of $4.72 billion in FY2020, down 26% y-o-y.