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[2018 Edition] Complete Guide To Start Your REITs Investing Journey In Singapore

Everything you need to know to start investing in REITs.


Singaporeans’ fascination for property investments stem from its meteoric rise since our island nation gained independence. Even in a more developed property market we live in today, en-bloc sales continue to fuel renewed frenzies in properties.

Even on the back numerous property cooling measures enforced to reduce speculation in residential properties, sky-high prices mean that property investments remain out of reach for ordinary Singaporeans.

This is where real estate investment trusts (REITs) play their part – allowing ordinary investors to access property investments in Singapore and other major property markets by pooling our monies to invest in a diversified portfolio of properties.

Firstly, You Need A Brokerage & CDP Account 

Do note that similar to all investments made on the Singapore Exchange, you need to open a stock brokerage and CDP account first before you are able to access the market. To open a brokerage account, you can go to the individual websites of brokerage firms to apply.

If this is the first time you are signing up for a brokerage account, your broker will likely aid in providing you the CDP application form to fill in and submit them, on your behalf, to CDP. This saves you the hassle of having to deliver the application form on your own. Alternatively, you can sign up for a CDP Account by downloading and completing the CDP application form. More information can be found on the SGX website.

Once you have submitted the CDP application form and all supporting documents, your CDP application is completed. CDP will notify you by post with all your necessary login information in about 10 business days from the day of your application submission.

Find Out More

 

What Are REITs?

REITs, short for real estate investment trusts, pool funds from many investors to purchase a large portfolio of properties. These properties are then leased out to collect rents, which are passed on to REIT investors in the form of regular dividends. Managed by professionals, these properties are enhanced to maximise rents and minimise costs.

REITs are listed on the Singapore Exchange (SGX), and can be bought and sold in a similar way to regular company stocks. While Singapore is a major REIT market in Asia Pacific, other markets such as Australia, Japan, Hong Kong, the UK, the US and other European countries also have established REIT markets that we can choose to invest in.

For a company to be classified as a REIT in Singapore, it has to meet strict regulatory guidelines including paying out more than 90% of its income, maintaining a gearing of less than 45%, limiting development activities to a maximum of 25% of its portfolio amongst others.

 

7 Types of REITs Listed In Singapore

Most REITs specialise in specific real estate segments. There are 46 REITs and property-related stapled securities in Singapore, and they are typically invested in these seven REIT types:

Read Also: 7 Types of REITS In Singapore, And The Reasons Why People Invest In Them

1. Commercial REITs

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*
1 CapitaLand Commercial Trust Singapore; Malaysia; Germany 5.5%
2 Frasers Commercial Trust Singapore; Australia 7.0%
3 IREIT Global Germany N.A.
4 Keppel REIT Singapore; Australia 5.3%
5 Manulife US REIT US 7.0%
6 OUE Commercial REIT Singapore; China 6.4%
7 Suntec REIT Singapore; Australia 5.9%
8 Keppel-KBS US REIT US 7.2%

*From OCBC Securities

 

2. Retail REITs

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*
9 BHG Retail REIT China N.A.
10 CapitaLand Mall Trust Singapore; China 5.6%
11 CapitaLand Retail China Trust China 6.9%
12 Dasin Retail Trust China N.A.
13 Fortune REIT Hong Kong 5.7%
14 Frasers Centrepoint Trust Singapore 5.8%
15 Lippo Malls Indonesia Retail Trust Indonesia 8.3%
16 Mapletree Commercial Trust Singapore 5.9%
17 Mapletree North Asia Commercial Trust China; Hong Kong; Japan 6.7%
18 SPH REIT Singapore 5.7%
19 Starhill Global REIT Singapore; Malaysia 7.4%
20 Sasseur REIT China 8.2%

*From OCBC Securities

 

3. Industrial REITs

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*
21 Aims Amp Capital Industrial REIT Singapore; Australia 7.9%
22 Ascendas India Trust India 6.5%
23 Ascendas REIT Singapore; Australia; China 6.5%
24 Cache Logistics Trust Singapore; Australia 8.2%
25 Cromwell European REIT Germany; Netherlands; France; Italy; Denmark 7.3%
26 EC World REIT China 9.1%
27 ESR-REIT Singapore 8.5%
28 Frasers Logistics & Industrial Trust Australia; Netherlands; Germany 6.7%
29 Keppel DC REIT Singapore; Australia; Malaysia; UK; Germany; Netherlands; Italy; Ireland 5.9%
30 Mapletree Industrial Trust Singapore 6.7%
31 Mapletree Logistics Trust Singapore; Australia; Malaysia; Hong Kong; Japan; Japan; China; South Korea; Vietnam 6.4%
32 Sabana REIT Singapore N.A
33 Soildbuild Business Space REIT Singapore 7.8%
34 Viva Industrial Trust Singapore 7.8%

*From OCBC Securities

 

4. Hospitality REITs

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*
35 Ascendas Hospitality Trust Singapore; Australia; Japan; China 7.6%
36 Ascott Residence Trust Singapore; Australia; Malaysia; Japan; China; Indonesia; Vietnam; Philippines; France; Germany; Spain; Belgium; UK; US 6.7%
37 CDL Hospitality Trust Singapore; Australia; Japan; UK; Maldives; New Zealand 6.4%
38 Far East Hospitality Trust Singapore 6.7%
39 Frasers Hospitality Trust Singapore; Australia; Japan; UK; Germany 7.4%
40 OUE Hospitality Trust Singapore 6.9%

*From OCBC Securities

 

5. Healthcare REITs

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*
41 First REIT Singapore; Indonesia; South Korea 6.5%
42 Parkway Life REIT Singapore; Japan 4.9%
43 RHT Health Trust India 7.7%

*From OCBC Securities

 

6. Other Property-Related Trusts

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*
44 Accordia Golf Trust Japan 8.2%
45 Hutchinson Port Holdings Trust Hong Kong; China 9.0%
46 Keppel Infrastructure Trust Singapore 7.5%

*From OCBC Securities

 

7. Residential

No REITs And Stapled Securities Country Exposure Indicative Dividend Yield*

*From OCBC Securities

There are currently no residential REITs or stapled securities listed in Singapore. Ascott REIT has certain residential properties in its portfolio, but is considered a hospitality REIT. Saizen REIT, a Japanese REIT that has been delisted since October 2017 was the last residential REIT listed in Singapore.

There are also three REIT exchange traded funds (ETFs) listed in Singapore.

REIT ETFs

No REITs And Stapled Securities Listed REITs Indicative Dividend Yield*
1 Lion-Phillip S-REIT ETF Singapore 1.7
2 NikkoAM-Straits Trading Asia Ex Japan REIT ETF Singapore; Malaysia; Hong Kong 4.1
3 Phillip SGX APAC Dividend Leaders REIT ETF Singapore; Australia; Hong Kong 4.3

*From Bloomberg

Here are two articles on how REITs have performed in Singapore recently:

Read Also: S-REIT Report Card: Here’s How Singapore REITs Performed In First Quarter 2018

Read Also: S-REIT Report Card: Here’s How Singapore REITs Performed In Full Year 2017

 

How To Start Investing In REITs?

We can invest in REITs the same way we invest in stocks and other listed securities on SGX. If we’re already investing in stocks, we can simply buy and sell REITs in the same manner.

As mentioned, if we’re entirely new to investing, we need a Central Depository (CDP) Account and a stock brokerage account.

Since REITs tend to pay out dividends of close to 6.8% per annum at regular intervals on a yearly basis. This makes it an ideal asset class to create a stable stream of dividend income.

We can use this to continue growing our REIT or other investment portfolios, and even supplement our retirement income when we’re ready to retire.

Read Also: Here’s How You Can Start Building A Dividend Income Portfolio To Replace Your Wage In Singapore

Read Also: Income Investing: How To Select The Right Stocks To Build A Sustainable Dividend Income Stream

 

What Are REIT ETFs?

In Singapore, there are currently three REIT ETFs listed on the SGX. They are the Lion-Phillip S-REIT ETF, NikkoAM-Straits Trading Asia Ex Japan REIT ETF and the Phillip SGX APAC Dividend Leaders REIT ETF. We can buy and sell these three REIT ETFs on SGX.

Primarily comprising high-quality REITs listed in the Asia Pacific region, REIT ETFs are typically passively managed. The main advantage of investing in REIT ETFs is its ability to free us from having to research, monitor and rebalance our REIT portfolio. It also ensures our REIT portfolio is widely diversified across managers, type of REITs and geographically.

Of course, for this convenience, we have to pay an ETF management fee. Over the long term, this may eat into our returns, so we need to carefully judge whether or not to embark on REIT ETF investing. As it is, we’re paying two types of fees when we invest in REITs – REIT management fees and property management fees.

Here are articles that give us a little more information about the REIT ETFs listed in Singapore.

Read Also: Investing in REIT ETFs Listed In Singapore: 5 Things You Need To Know

Read Also: REIT ETFs – Really The Best Of Both Worlds?

 

Pros And Cons To Investing In REITs VS Physical Properties

Many of us may dream of owning our own private properties that we can collect lucrative rents on as well as capture high capital appreciation when an en-bloc opportunity or willing buyer comes along.

While we tend to only look at the positives, there are both pros and cons to owning properties VS REITs.

To read further on the pros and cons of investing in each asset class, here are some articles we’ve written on the topic.

Read Also: Property Lovers In Singapore: Invest Via Condos, REITS Or Real Estate Companies?

 

Final Questions We Should Ask When We Decide To Invest In REITs

# 1 Does The REIT Own High-Quality Properties?

One simple way to judge whether investing in a REIT will be a good long-term investment is simply to look at its properties. Many Singapore-listed companies have properties in Singapore that we can go to.

Malls such as Suntec City, Vivo City, Plaza Singapura, Causway Point are all owned by different REITs in Singapore. We can choose to invest in REITs that own properties that we prefer visiting ourselves, as it provide a good indicator for how other consumers may think.

It doesn’t just stop at malls, there are office buildings such as China Square Central, Asia Square, Suntec, One Raffles Place and many more as well as industrial hubs such as Changi Business Park, Airport Boulevard, Woodlands Central that are all owned by REITs. We can easily visit these properties or do a little desktop research into whether people like to dislike these locations and property type.

# 2 Where Do You See The REIT In 10 Years?

Another good indicator is whether we see the properties in the portfolio continuing to do well in the next 10 years.

Some further questions may include:

  • Are these properties well maintained or dirty and old?
  • Are these properties in good locations or ones that may go out of favour?

We could also look at how high geared these REITs are. REITs that have high levels of debt may be at higher risk when interest rates go up, or may not have as much opportunity to add to its portfolio.

# 3 How Is Its Management Team?

We could also go to the individual REITs’ Annual General Meeting (AGM) to speak to the management team. This may give us some insights into the character of the people managing our investments.

# 4 Are You Confident Of Choosing The Right REIT?

Lastly, we should ask ourselves if we’re confident of choosing the right REIT and investing at the right time.

If we aren’t so sure, we can invest all or part of our money via the REIT ETFs and via regular investment plans. This will ensure our portfolio is well-diversified and we do not time the markets.

Read Also: Step-By-Step Guide To Investing Using Regular Shares Savings (RSS) Plan