Is It Finally Time to Pounce on REITs?
If you’ve been watching the market lately, you know things are getting messy. Trade tariffs are back in the spotlight, recession fears are creeping in, and interest rates may have finally peaked. But while uncertainty sends some investors running, others see opportunity—and right now, many are turning their attention to Real Estate Investment Trusts (REITs).
These dividend-heavy assets have been battered in recent years by rising rates, but with a potential shift in monetary policy and rental growth on the horizon, could this be the moment to get back in? Let’s break down what’s happening and why REITs are making a strong comeback.
The Market Storm: What’s Driving the Shift?
If history is any guide, uncertain times tend to push investors toward assets that offer predictable income and stability—and that’s exactly what many REITs bring to the table.
Right now, two big factors are in play:
- Trade War Jitters: The return of higher tariffs is rattling global markets, adding uncertainty to corporate earnings. Investors are looking for safer bets.
- Recession Watch: Economic growth forecasts are softening, making defensive, income-generating plays like REITs more attractive.
- Interest Rates Peaking? After a cycle of aggressive rate hikes, the tide may be turning. Lower borrowing costs could boost REIT valuations and acquisition opportunities.
Dividend Growth and Key REIT Picks
Despite recent market turbulence, Singapore’s REITs are showing signs of resilience:
- The MSCI SG dividend yield is projected to rise from 1% in 2024 to 4.6% in 2025.
- REITs are expected to resume DPU (distribution per unit) growth of 1% in 2025, helped by organic rental increases and potential acquisitions.
- Top REIT Picks: We favor CapitaLand Ascendas REIT (CLAR) and Keppel DC REIT (KDCREIT) for their solid fundamentals.
- Among retail REITs, we prefer the larger-cap names such as CapitaLand Integrated Commercial Trust (CICT) and Frasers Centrepoint Trust (FCT), which have stable tenant bases and strong rental income.
The Bottom Line: Why REITs Deserve a Second Look
For income-focused investors, REITs could be an attractive way to navigate market uncertainty while locking in stable dividends and potential upside from a more favorable interest rate environment.
With fears of a slowdown looming and capital costs potentially easing, this might just be the best entry point we’ve seen in years. The question is—are you ready to make the switch?
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
