Singapore real estate investment trusts have gone from last year’s biggest losers to this year’s best performers as their world-beating yields attract investors including BNP Paribas Investment Partners to Samsung Asset Management.
Singapore REITs, which mostly invest in malls, offices and industrial buildings, offer the highest dividend yields among developed markets, according to data compiled by Bloomberg. That’s propelled a 8.9 per cent increase in the FTSE Straits Times Real Estate Investment Trust index this year as yield-hungry investors flock to the offerings amid record-low interest rates.
“We’re overweight on Singapore REITs,” said Mr Jan Willem Vis, an Amsterdam-based senior portfolio manager at BNP Paribas. “They’re attractively valued compared to other markets. REITs are a very good alternative to bonds and they pay sustainable dividends.”
International investors including BNP, Bank of New York Mellon Corp and Samsung Asset have accelerated purchases of Singapore REITs since June, amid growing expectations central banks will keep interest rates lower for longer. Fund managers have bought 217.84 million units in the five biggest Singapore-listed REITs, the data showed.
The 7 per cent yield offered by Singapore REITs, exceeds 6 per cent for those listed in Australia and the US and Japan’s 4 per cent, according to data compiled by Bloomberg. The buying has helped the FTSE Straits Times Real Estate Investment Trust index erase most of 11 per cent slump last year, when it was the worst performer among REITs listed in Australia, the US, Japan and Europe. This year, the Singapore REIT index has beaten all those peers.