S-Reits pivot to 'new economy' in tough 2021; look forward to brighter year ahead

SINGAPORE-LISTED real estate investment trusts (S-Reits) underperformed in 2021, weighed down by prolonged pandemic-related restrictions and growing fears of inflation and rising interest rates.

The iEdge S-Reit Index edged up 0.9 per cent in 2021 and chalked up a total return of 5.2 per cent. In comparison, the benchmark Straits Times Index (STI) rose 9.8 per cent and delivered a total return of 13.6 per cent over the same period.

"The relative underperformance mainly comes from the market pricing in expectations that the US Federal Reserve could be looking to raise rates as economic conditions improve and inflation rates pick up through the course of 2021. This is on the back of a combination of supply chain disruptions amidst rising demand," said DBS analysts Derek Tan, Rachel Tan, Dale Lai and Geraldine Wong in a recent sector report.