Singapore’s Office Market Poised To Rebound, Says Moody’s
SINGAPORE – Moody’s Investors Service stated that owners of commercial properties here will see an increase in earnings due to robust pent-up demand and the significant relaxation of COVID-related curbs, reported The Business Times on Wednesday afternoon (13 July, SGT).
In a report published on Wednesday, the ratings agency thinks that office landlords here will continue to have more bargaining power over office rents than tenants. This is on the back of the rising demand and the limited new stock of quality office space in Singapore’s central business district (CBD).
Moody’s Investors Service identified three Singapore-listed real estate investment trusts (S-REITs) that will benefit substantially from the recovery in both retail and office demand. These are Frasers Centrepoint Trust (FCT), Mapletree Commercial Trust (MCT), and CapitaLand Integrated Commercial Trust (CICT).
In particular, the ratings agency expects FCT’s earnings to remain stable in FY2022 to FY2023, while that of MCT and CICT are forecasted to grow significantly after recent mergers and acquisitions (M&A).
All three S-REITs are expected to record aggregate increase in their earnings before interest, taxes, depreciation, and amortization (EBITDA) of 22 percent in 2022, and an additional 14 percent by next year.
“Rated REIT’s aggregate leverage – as measured by net debt/EBITDA – will rise temporarily this year, but interest coverage and debt/deposited assets will continue to be strong,” noted Moody’s analysts.
“Higher retail sales and footfall following the easing of coronavirus measures will reduce both the need for rent rebates and the likelihood of rent deferrals, which will support earnings recovery for retail property owners,” they added.
Furthermore, Moody’s Investors Service anticipates a solid rebound in earnings growth for major Singapore real estate developers UOL Group, GuocoLand, and City Developments Ltd (CDL), as their investment property and hospitality assets account for 35 percent to 70 percent of their overall assets.
