Brokers' take

Singapore industrial real estate DBS Group Research, Aug 22

WE believe that the face of Singapore's industrial real estate will continue to evolve alongside the continued restructuring of manufacturing activities. The government's push towards retaining higher value jobs in Singapore while off-shoring low value-added operations will mean that in the coming years, we will see (i) continued streamlining of total industrial footprint, (ii) structurally higher vacancy rates in excess of 10 per cent over time, and (iii) continued weakness in rental rates of -5 per cent per annum. Business parks and high-tech specs will do well, and warehouses will remain resilient.

Top picks: A-Reit and MINT. Apart from taking a defensive stance to maintain occupancies, we believe that real estate industrial trusts (Reit) need a long-term sustainable strategy to (i) undertake development activities with the aim of raising net asset values and earnings, and (ii) diversify geographically in order to improve portfolio resilience and growth. Among the industrial Reits, we believe that A-Reit and MINT have the most flexibility to undertake such activities.