The demand for S-reits is resulting in falling yields.
But the demand is underpinned by macroeconomic uncertainties that are expected to linger, and the fact that S-Reits’ yield spread remains one of the highest in the world, when compared to other major Reit markets, said Credit Suisse in a report issued on Thurday.
“In our view, S-Reits still offer an attractive investment proposition given yields of 5-6 per cent on average,” said Credit Suisse.
The weighted-average yield for S-Reits trading above US$1 million per day is at 5.5%, which implies that a further yield compression of 50 basis points should easily translate into about 10% share price appreciation, offering a total return of about 15%, added Credit Suisse.
The only problems, I have about trimming my portfolio is that that I hold “risker” Reits, and the payouts could increase.
But it’s “watch and watch” from now one.