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Singapore industrial Reit sector will be resilient in slowdown: Fitch
The industrial Reit (real estate investment trust) sector in Singapore will remain resilient in the face of the current economic slowdown, underpinned by its "robust" financial profiles, said ratings agency Fitch on Tuesday.
"We expect rental rates on Singapore industrial property to remain under pressure in 3Q15, as falling demand meets increasing supply across all industrial asset types," said analysts Hasira De Silva and Nandini Vijayaraghavan.
"There is more pressure on rents of lower-specification industrial properties because of weaker demand and higher supply, while higher-specification properties are less affected as demand remains stable."
At higher risk are Reits with a higher proportion of near-term lease renewals and a greater proportion of low-specification assets, said Fitch.
Some 80 per cent of the sector's debt have fixed rates. This, coupled with the "narrow mismatch" between the duration and its lease and debt contracts, will help support the sector's resilience in a downturn, it added.