Better year expected for office and hospitality Reits

Singapore

WITH rate hike and sector consolidation fears petering out over 2017, real estate investment trusts (Reits) made a startling rebound to outdo the benchmark Straits Times Index with a 20.6 per cent rise in unit prices last year.

What turned the tide was a better-than-expected improvement in Singapore's economic growth and a levelling out between supply and demand over the course of the year.

While distributions have not increased significantly in 2017 - either dipping slightly or maintaining across the different baskets of securities that different brokerages track - analysts expect distributions to improve in 2018 in tandem with rental increases.

UOB Kay Hian analyst Vikrant Pandey expects to see improvements in distributions per unit (DPU) of 1-6 per cent. OCBC Investment Research analyst Andy Wong projects a 2.8 per cent growth in DPU, while DBS senior vice-president for group equity research Derek Tan has forecast…