No right time to remove tax breaks for Reits

SINCE the listing of the first Singapore real estate investment trust (S-Reit) in 2002, the market for S-Reits has flourished. Today, there are 28 S-Reits and six stapled securities (Reit bundled with registered business trust) listed on Singapore Exchange (SGX) with a total market capitalisation of S$67 billion. The S-Reits achieved an average total return of 12.9 per cent in 2014, beating the Straits Times Index's 9.5 per cent return.

Undeniably, tax breaks have been instrumental to the healthy growth of S-Reits and boosting their attractiveness as a good asset class for investment. They have encouraged the setting up of S-Reits and lured institutional and individual investors, both foreign and local, to this asset class.

Tax breaks have enabled S-Reits to be structured in a tax-efficient manner and hence return an attractive distribution yield to investors. Arguably, no other tax breaks have such a direct impact on the yield of a capital market product.