Singapore Office REITs Faring Better

Singapore Office REITs Faring Better Amidst Workplace Return

SINGAPORE – A research analyst stated that real estate investment trusts (REITs) based in the city-state that focus on office properties saw improved metrics, including higher office rents, as more staff return to the office, reported The Business Times on Sunday afternoon (15 May, SGT).

Notably, there are six Singapore REITs (S-REITs) that hold office assets here. Keppel REIT only owns office properties, while the remaining five are diversified trusts with some exposure to local office developments. These are Suntec REIT, OUE Commercial REIT, Lendlease Global Commercial REIT, Mapletree Commercial Trust (MCT), and CapitaLand Integrated Commercial Trust (CICT).

Emelia Tan, a research analyst at the Singapore Exchange (SGX), said Keppel REIT recorded a 4.3 percent year-on-year growth in distributable income for the first quarter of the year, primarily from its purchase of Keppel Bay Tower in 2021.

Most of Keppel REIT’s new office leases for the first quarter occurred at its Singapore office projects, namely One Raffles Quay, Ocean Financial Centre, and Marina Bay Financial Centre. The average monthly signing rent for its Singapore office leases stood at S$11.15 psf, exceeding Singapore’s average core CBD Grade A office rents of S$10.95 psf.

As for CapitaLand Integrated Commercial Trust, it has seen better portfolio occupancy of 92.3 percent for its Singapore office portfolio and witnessed a 9.3 percent increase in rent reversion in Q1 2022.

Recently, CICT concluded its purchase of a 70 percent stake in CapitaSky (previously known as 79 Robinson Road), which has a net property income (NPI) yield of 4 percent and committed office occupancy rate of 92.9 percent.

Meanwhile, Mapletree Commercial Trust revealed that the gross revenue that it derives from its business parks and office assets edged up by 1.9 percent year-on-year in FY2021/2022. The uptick was driven by higher contributions from mTower, Mapletree Business City, and Bank of America Merrill Lynch HarbourFront (MLHF).

All of MCT’s office/business park assets registered robust occupancy levels, with that in mTower rising to 84.7 percent from 75 percent previously.

As for Suntec REIT, its office committed occupancy level improved to 97.5 percent and the trust saw a 3.2 percent increase in office rental reversion for FY2021.

Suntec REIT forecasted that income contribution from its Singapore office properties would increase further, propelled by cumulative positive rental reversions achieved in the past 11 quarters and full impact of revenue from leases secured in 2021.

“OUE Commercial REIT noted that average passing rents of its Singapore office properties were higher year on year, with OUE Bayfront hitting a high of S$12.49 psf. Its office properties were observed to record higher valuations ranging from 0.2 to 7.5 per cent year on year, compared to its other segments,” added Tan.

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