RETAIL investors have been net buyers of Singapore real estate investment trusts (S-Reits) in 2024 amid volatile performance for the sector during the year.
These investors bought some S$1.6 billion net across the sector in 2024, taking their total net inflows into S-Reits over the past five years to more than S$6 billion.
Across the broader Singapore market, the Reit sector had the highest net retail inflows in 2024, followed by real estate (excluding Reits), which had about S$400 million in net inflows.
Meanwhile institutional investors were net sellers of S-Reits, with S$1.6 billion in net outflows in 2024.
S-Reits ended 2024 in the red, with the iEdge S-Reit Index generating a total return of -6.1 per cent inclusive of distributions, but the performance during the year was volatile as market participants weighed the path of inflation and interest rates.
The sector delivered one of its best quarterly performances on record in Q3 2024 on the back of the US Federal Reserve cutting interest rates for the first time in four years.
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But optimism dipped in the fourth quarter – even as the Fed continued to deliver two more rate cuts – as market participants closely monitored inflation indicators.
The weakness in S-Reits prices, however, may have prompted some to opportunistically add to their portfolios.
Retail investors were net buyers of S-Reits in Q1, Q2 and Q4 of 2024, which corresponds with periods where the overall sector saw price declines.
The strongest retail buying came during Q4 – when the iEdge S-Reit index fell 10.5 per cent – with more than S$750 million in net inflows.
On the other hand, retail investors were net sellers in Q3 2024, when they capitalised on the upswing in prices.
For the full year, the S-Reits with the highest net retail inflows were mostly large counters. All seven S-Reits on the Straits Times Index (STI) had positive net retail inflows, while CapitaLand Ascott Trust and Keppel Reit, which are currently on the STI reserve list, also ranked among the top 10.
Mapletree Logistics Trust (MLT) and CapitaLand Ascendas Reit (CLAR) led in terms of retail net buying, with S$336 million and S$282.6 million of net inflows respectively.
These counters also ranked among the top five for net retail inflows across the broader Singapore market.
In its first-half results announced in October 2024, MLT’s manager noted that the portfolio saw stable operational performance, with occupancy of 96 per cent and positive rental reversions across most markets.
However, higher borrowing costs, lower revenue contribution from China and regional currency weakness weighed on distributable income. The manager is focused on its portfolio rejuvenation strategy of accretive acquisitions, strategic asset enhancements and selective divestments of lower-yielding assets with limited redevelopment potential that are no longer aligned with MLT’s strategy.
The S-Reits that had the highest net retail selling in 2024 were Keppel DC Reit and Suntec Reit – both of which are also on the STI reserve list – with S$51.7 million and S$124.2 million in net outflows respectively.
In December 2024, property tycoon Gordon Tang and his wife Celine, through Aelios, launched a mandatory conditional cash offer for Suntec Reit at S$1.16 per unit. The offer was raised to S$1.19 apiece on Jan 8. Suntec Reit had the highest net institutional buying for the sector last year, with S$114.4 million of net inflows.
As at Jan 10, the iEdge S-Reit index traded at a price-to-book ratio of around 0.85, below its five-year average of 0.99, Bloomberg data indicated. The index traded at an estimated dividend yield of 6.5 per cent, above the five-year average of 6 per cent. SGX RESEARCH
The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.
