DBS: Singapore REITs will be resilient in 2023

REITs “offer resiliency given their attractive and growing distribution yields” as investors are turning defensive, says Eng-Kwok Seat Moey, group head of capital markets at DBS.

SINGAPORE: Real estate investment trusts (REITs) in Singapore will remain attractive to investors amid market volatility, according to DBS Group Holdings Ltd.

REITs “offer resiliency given their attractive and growing distribution yields” as investors are turning defensive, Eng-Kwok Seat Moey, group head of capital markets at DBS, said in an interview.

Interest rates have climbed globally, pressuring returns for some investments.

While the opportunity cost of investing in REITs in the city-state has increased, they will come on strongly thanks to their steadily increasing dividends, she added.

Heightened volatility makes it challenging to introduce new initial public offerings as investors have become more selective, she said, adding that deals would have to come at “more market-friendly valuations” and be supported by a larger percentage of cornerstone investors.

DBS was among the coordinators for Digital Core REIT Management Pte’s US$647mil (RM2.85bil) Singapore listing and Daiwa House Logistics Trust’s US$145mil (RM639mil) initial public offering (IPO), both of which took place in November 2021.

Elsewhere in South-East Asia, first-time share sales in Thailand will stand out for another year, after proving relatively resilient amid a global slowdown in capital raising.

Thai IPO volumes reached nearly US$4bil (RM17.63bil) so far this year, down just 3.6% from the same period in 2021, and accounting for more than half of the US$7.7bil (RM33.94bil) raised in South-East Asia, data compiled by Bloomberg show.

By contrast, global IPO volumes have fallen nearly 70% year on year, due to factors including increasing interest rates and geopolitical tensions. — Bloomberg