Analysis: The valuation of Singapore REITs largely reflects expectations of interest rate risks.

Analysts from DBS Group Research Department stated in a report that the valuation of Singapore Real Estate Investment Trusts (REITs) seems to largely reflect the risk expectations related to the rise in benchmark interest rates. The analysts also mentioned that the continued high long-term bond yields and the change in monetary policy expectations have been dragging down the recent market sentiment for Singapore REITs. However, they added that the current trading prices of these REITs correspond to a yield of 6.2% in 2026, which implies an attractive yield spread of about 4.0% compared to the 10-year Singapore government bonds. They recommend focusing on sectors with higher earnings visibility, resilient occupancy rates, and limited supply in sub-markets that can sustain rent increases. Compared to the industrial, retail, and hospitality sectors, DBS Group Research prefers the Grade A office sector. CapitaLand Integrated Commercial and CapitaLand Ascendas are among the top picks for the DBS Group.