Investing Updates : S-REITs Fell in 2024: Are They Still Attractive in 2025 with Higher for Longer Rates?

URL: https://drwealth.com/s-reits-fell-in-2024-are-they-still-attractive-in-2025-with-higher-for-longer-rates/

BoltAI:

In 2024, Singapore Real Estate Investment Trusts (S-REITs) faced significant challenges, with major ETFs like the CSOP iEdge S-REIT Leaders Index ETF and Lion-Phillip S-REIT ETF declining by 11.6% and 9.9%, respectively. Despite the general downturn, some REITs, such as Cromwell European Real Estate Investment Trust, achieved remarkable growth, indicating a diverse performance landscape.

The analysis highlights that REITs with strong Net Property Income (NPI) growth and high dividend yields tended to perform better. However, outliers exist where financial performance did not correlate with market success, suggesting external macroeconomic factors also play a vital role.

Key trends indicate that REITs with lower leverage ratios (below 40%) are currently more appealing to investors. For instance, Cromwell and Keppel DC REIT outperformed due to higher occupancy rates and a focus on logistics and e-commerce, sectors benefiting from ongoing digital and supply chain growth. In contrast, REITs heavily invested in office properties, like IREIT Global, struggled due to the lingering effects of remote work and economic pressures in their primary markets.

The rising interest rates have particularly impacted US office market REITs, making debt servicing difficult, while those with proactive portfolio management strategies, like CapitaLand Integrated Commercial Trust, showed resilience through high occupancy and fixed-rate borrowings.

Looking ahead to 2025, S-REITs may recover, but investors need to be discerning. With the potential for lower interest rates, consumer spending in Southeast Asia is anticipated to grow, particularly in countries like Indonesia and Vietnam. However, caution is advised, especially regarding REITs in Europe, given slow economic growth and debt challenges.

In summary, while some S-REITs may present attractive opportunities in 2025, a careful and selective investment approach is crucial in the face of ongoing macroeconomic uncertainties and higher interest rates.

Opinion:

I see many articles being overly cautious on REITs. Let's go All In Now! 😂

Stay calm. Get your portfolio allocations right.

I think REITs will be fine at some point during Trump's second term.