S-Reits maintain pockets of resilience despite headwinds in H1

[SINGAPORE] Singapore real estate investment trusts (S-Reits) trailed the broader local market in the first half of 2026 amid a backdrop of higher bond yields, elevated oil prices and ongoing geopolitical uncertainty.

Even so, there were still pockets of resilience within the sector, with nine S-Reits recording positive total returns for the year to date.

The iEdge S-Reit Index recorded a total return of -3.9 per cent year to date, compared with 13.7 per cent total return for the Straits Times Index over the same period.

Investors were more cautious as they assessed the interest rate outlook, with the US Federal Reserve maintaining its benchmark rate at 3.5 to 3.75 per cent in June.

Analysts from DBS Group Research noted in July that most investors recognise that valuations for S-Reits remain attractive, at around 0.9 times price-to-book ratio, even as sentiment remains cautious as macro factors continue to overshadow resilient real estate fundamentals.

Aims Apac Reit led the iEdge S-Reit index outperformers with a total return of 10.3 per cent.

The Reit recorded 2.2 per cent revenue growth and 5.7 per cent net property income growth to S$190.7 million and S$141.3 million respectively in FY26. Distribution per unit increased 2.6 per cent to S$0.0985.

DBS Group Research analyst Dale Lai expects positive operating performance to continue, supported by strong operating metrics. He sees further growth in organic income driven by proactive portfolio management.

In terms of fund flows, retail investors were net buyers of approximately S$1 billion worth of S-Reits in the year to date, while institutional investors were net sellers of a similar amount.

Against this backdrop, Aims Apac Reit stood out as one of the few Reits to record net institutional inflows, attracting inflows of about S$18 million.

Another Reit that has attracted institutional interest is Centurion Accommodation Reit (CAReit). It recorded net institutional inflows year-to-date and recently saw global real estate investment manager Cohen & Steers become a substantial unitholder after it increased its deemed interest from 4.995 per cent to 5.004 per cent on Jul 2. Analysts have also highlighted CAReit’s long-term growth potential.

In May, CGS International Research analysts Li Jialin and Lock Mun Yee noted CAReit’s growth runway, highlighting that 3,112 additional beds had been added through Westlite Toh Guan, Westlite Mandai and the acquisition of Epiisod Macquarie Park in Sydney.

The analysts added that CAReit could further increase its operational purpose-built worker accommodation bed count through the Westlite Mandai Expanded Capacity project, which is pending approval under the Foreign Employee Dormitories Act.

Looking ahead, market observers remain selective on the sector. Beansprout analyst Gerald Wong noted that segments such as Singapore office, data centres and purpose-built accommodation continue to benefit from relatively stable demand, while Reits with overseas assets that actively manage currency risks may be better positioned.

He added that investors may wish to focus on Reits with clear distribution growth drivers, such as CapitaLand India Trust , Digital Core Reit and Stoneweg European Reit , while Aims Apac Reit and Parkway Life Reit continue to offer defensive income resilience. SGX RESEARCH

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the S-Reits & Property Trusts Chartbook.