ACCORDING to data from JLL, leasing activities in quality office developments in Singapore improved in the fourth quarter of 2024. Rental and capital values are expected to stay stable in the first half of 2025, and recover in the latter half of the year.
CBRE predicts a modest rise in Core Central Business District Grade A rents in 2025 due to tentative demand, limited supply, and continued flight to quality.
We preview this earnings season as four of six Singapore-listed real estate investment trusts (S-Reits) with exposure to Singapore-based offices have reported their results.
Keppel Reit reported higher property income and net property income (NPI) for the 2024 financial year; they increased by 12.2 per cent and 10.7 per cent, respectively, year on year. This growth was driven by better performance at Ocean Financial Centre in Singapore, T Tower in Seoul, and KR Ginza II in Tokyo, as well as contributions from 2 Blue Street and 255 George Street in Sydney.
Keppel Reit achieved a rental reversion of 13.2 per cent in FY2024, up from 9.9 per cent in FY2023. It also maintained a committed portfolio occupancy of 97.9 per cent as at Dec 31, 2024, an improvement from 97.1 per cent in FY2023.
However, despite this robust operational performance, the trust’s distributable income and distribution per unit (DPU) dipped due to higher borrowing costs. DPU for the second half of FY2024 was S$0.028, with full-year DPU at S$0.056.
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Looking ahead, Keppel Reit aims to capitalise on the flight-to-quality trend, ensuring sustainable long-term returns for unitholders amid a global growth forecast of 3.3 per cent in 2025, as well as stable local office rental market conditions.
Mapletree Pan Asia Commercial Trust (MPACT) reported lower gross revenue and NPI for the third quarter of FY2024/2025. They decreased by 7.4 per cent and 8.5 per cent, respectively, year on year due to the divestment of Mapletree Anson and lower overseas contributions, which were dampened by a strong Singapore dollar.
However, MPACT’s Singapore properties showed resilience, with the 0.2 per cent year-on-year revenue increase led by VivoCity’s robust performance. The trust’s DPU for Q3 declined 9.1 per cent to S$0.02.
Its Singapore portfolio demonstrated strength, with rental reversions ranging from 2 per cent at Mapletree Business City to 16.9 per cent at VivoCity. As at Dec 31, 2024, the portfolio was 90 per cent committed, with increases across most markets except China and South Korea. MPACT’s core stability remains anchored by Singapore’s dominant position.
OUE Reit recorded a 3.7 per cent year-on-year revenue growth for FY2024, but a 0.4 per cent dip in NPI. Revenue for H2 FY2024 increased by 1.7 per cent year on year, mainly due to the stable operational performance of the trust’s Singapore office portfolio, as well as asset enhancements at Crowne Plaza Changi Airport. The latter led to revenue per available room growing 25.5 per cent.
The amount available for distribution for H2 grew by 3.7 per cent year on year. Including the release of the remaining capital distribution from its 50 per cent divestment of OUE Bayfront, the Reit’s DPU rose 8.7 per cent year on year to S$0.0113.
Its Singapore office portfolio maintained a 94.6 per cent occupancy rate as at Dec 31, 2024, with full-year positive rent reversion of 10.7 per cent. Following the divestment of non-core asset Lippo Plaza Shanghai, OUE Reit’s assets are now exclusively in Singapore.
Suntec Reit reported a 1.6 per cent year-on-year decline in distributable income and 2.3 per cent lower DPU for FY2024. It noted that its Singapore office and retail portfolios continued to perform, and achieved strong rent reversions across all the quarters of the year.
For 2025, positive rent reversion is expected to be modest, in the range of 1 to 5 per cent, supported by healthy occupancy. 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.
