Interest In Singaporean REITs Starts to Fall

Singapore’s REITs, and in particular their juicy yields of sometimes more than 7 percent, had gained in popularity as interest rates fell, but with the U.S. Federal Reserve beginning to taper its asset purchases and global interest rates headed higher, that popularity is getting a bit thin.

“It’s a theme which has lasted for quite a period of time,” Gibson noted. “People want yields as a starting point, but they also want growth,” he said. “For Singapore, the growth is relative anemic. There’s not a huge amount of upside.”

Ong also noted that interest in REITs has been waning, with the segment’s average daily volume falling from around $80 million (USD) to around $35 million to $40 million daily in December. “The interest is all gone,” he said. He expects this will affect the performance of the new listing.

While Ong noted the OUE Commercial Trust managed to land several cornerstone investors, there were no big institutional funds among their ranks, which were mostly made up of Chinese individuals.

Henderson’s Gibson said he’s giving the listing a pass. “We can get a higher return from other markets,” he said.

The trust’s growth prospects appear somewhat limited; while its sponsor has three more office assets it could offer to the REIT, rising interest rates may make the acquisitions unpalatable.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza