Last Updated on October 3, 2022 by Chin Yi Xuan

If you are investing for consistent dividend income, Singapore REITs (S-REITs) offer an investment option that you should not miss.

In this post, let’s explore S-REITs, and why it is such a great choice, especially for investors looking to build a stable dividend income portfolio!

RELATED POSTS:

p

What is S-REIT?

Singapore Real Estate Investment Trusts (S-REITs) are listed companies in Singapore that own and/or manage local and global properties such as malls, hotels, warehouses, data centres, and more.

Through rental income from these properties, S-REITs generate yield for investors looking for consistent dividend income.

S-REITs are an important part of the Singapore stock market. With 43 listed REITs and a total market cap of around S$110 billion, S-REITs make up around 13% of the whole Singapore stock exchange.

Effectively, this makes the REIT industry in Singapore the largest REIT market in Asia (excluding Japan) and is increasingly becoming an international REIT hub.

SREIT vs other REIT markets
S-REIT is one of the most established REIT markets in Asia. (Source: REIT Association of Singapore)

4 reasons why I invest in S-REITs

#1 Earn attractive dividend yield at low volatility

Generally, one of the main reasons why S-REITs are favoured by investors is due to its higher-than-average dividend yield.

Based on the latest 12-month yield (as of July 2022), S-REITs generate an average dividend yield of 6.3% – which is higher than Singapore’s key Straits Times Index (STI) and government bond respectively.

SREIT dividend yield vs other asset classes
S-REIT dividend yield vs other asset classes (Source: SGX)

In addition, investors are able to enjoy these attractive dividend yields at relatively low volatility.

When compared to major global markets, both S-REIT indices (which represent the performance of S-REITs) have been able to produce competitive yield at significantly lower volatility:

SREIT volatility and dividend yield
S-REIT generates yield at relatively low volatility (Source: SGX)

#2 Grow your passive income in SGD

Investing in S-REITs is also a great way for investors to grow a dividend income stream in SGD.

SGD to MYR
SGD to MYR (Source: Google)

From RM2.25 to RM3.20, MYR has lost value against the SGD in the past decade. As such, investing in S-REITs can be an attractive move, especially for dividend investors looking to protect themselves against a weakening currency.

SGD to MYR (2007 - 2022)
SGD to MYR (2007 – 2022). Source: TradingView

#3 Competitive overall growth

In addition to dividend yield, S-REITs have been producing a decent long-term total return relative to other REIT markets globally.

From the comparison below, the FTSE ST REIT Index (which reflects the average performance of S-REITs) delivered a 5-year total return of 69% (2017 – 2021). This means it outperformed key REIT markets from Australia (ASX), Japan (TSE), and the US.

SREIT outperformed other established REIT markets in the past 5 years
S-REIT outperformed other established REIT markets in the past 5 years (Source: REIT Association of Singapore)

In a challenging 2022, S-REITs continued to display low volatility compared to other markets:

SREIT performance vs other markets
Highlight: SREIT’s 2022 performance vs other markets (Source: SGX)

#4 Global exposure to quality real estate & sector diversification

The S-REIT market also allows investors to have a very respectable exposure to the global real estate scene.

To be precise, over 85% of S-REITs own and/or manage properties outside Singapore.

SREIT provides exposure to quality real estate globally
S-REIT provides exposure to quality real estate globally (Source: REIT Association of Singapore)

In addition, within the S-REIT industry itself, there are REITs that focus on various business sectors. As an example:

  • Retail REITs: Mapletree Pan-Asia Commercial Trust (SGX: N2IU) owns Vivocity, the biggest mall in Singapore; CapitaLand China Trust (SGX: AU8U) mainly owns malls in Tier 1 cities in China (eg. Beijing).
  • Specialized REITs: Keppel DC REIT (SGX: AJBU) owns data centers around the globe.
  • Office REITs: Manulife US Trust (SGX: BT0U) owns office buildings in the US.
  • Industrial REITs: Ascendas REIT (SGX: A17U) owns logistics and industrial properties in Singapore, UK, Australia, and more.
  • Aside from that, there are also Healthcare, Hospitality, Residential and Diversified REITs as well. For more details on different S-REITs, click HERE.

All in all, as an international REIT hub, S-REITs allow investors exposure to quality global real estate, with the option to diversify their REIT investments across different sectors – neat!

READ MORE: 6 different REITs and their pros & cons

Different types of REITs in Singapore
Breakdown of different types of REITs in Singapore (Source: REIT Association of Singapore)

How to invest + Best performing S-REITs & S-REIT ETFs

There are 2 main ways you can invest in S-REITs:

Method 1: Invest in individual S-REITs

The first way to invest in S-REITs is by investing directly in individual S-REITs listed on the Singapore stock exchange (SGX).

Below are the best-performing S-REITs based on the 3-year annualized total return for your reference (Source: SGX, as of August 2022):

  • Parkway Life REIT (SGX: C2PU)

    • 3y Annualized Return: 20%
    • Dividend Yield: 3.0%
    • Parkway Life REIT is a healthcare S-REIT that owns & manages 56 healthcare facilities (eg. hospitals & nursing homes) mainly in Singapore & Japan.
Parkway Life REIT performance
Parkway Life REIT performance & dividend yield (Source: SGX)
  • Frasers Logistics & Commercial Trust (SGX: BUOU)

    • 3y Annualized Return: 12.7%
    • Dividend Yield: 5.4%
    • Frasers Logistics & Commercial Trust is a diversified S-REIT that owns more than 100 industrial & commercial properties (e.g. Warehouses, factories, offices) across five major developed markets – Australia, Germany, the United Kingdom, Singapore, and the Netherlands.
Frasers Logistics & Commercial Trust performance & dividend yield
Frasers Logistics & Commercial Trust performance & dividend yield (Source: SGX)
  • Mapletree Industrial Trust (SGX: ME8U)

    • 3y Annualized Return: 11%
    • Dividend Yield: 5.1%
    • Mapletree Industrial Trust is an industrial S-REIT that owns industrial properties and data centres in Singapore & the US.
Mapletree Industrial Trust performance & dividend yield
Mapletree Industrial Trust performance & dividend yield (Source: SGX)

Method 2: Invest in REIT ETFs listed in Singapore

The 2nd way to invest in S-REIT is by investing in REIT Exchange-Traded Funds (ETFs) listed on the Singapore stock exchange (SGX).

S-REIT ETFs allow investors to gain exposure to a basket of Singapore and/or global REITs.

An S-REIT ETF is a great choice for investors that seek diversified REIT exposure and do not want the hassle of managing a portfolio of individual REITs.

Below are 5 SREIT ETFs listed on the SGX (Source: SGX, as of August 2022).

For your reference, I’ve also covered all S-REIT ETFs in detail in a separate post, which you can check out below:

LEARN MORE: How to choose the best S-REIT ETFs for dividend income! 

  1. Phillip SGX APAC Dividend Leaders REIT ETF (SGD: BYJ | USD: BYI)

12-Month Dividend Yield: 3.47% 

The Phillip SGX APAC Dividend Leaders REIT ETF is an ETF that tracks the iEdge APAC ex Japan Dividend Leaders REIT Index.

It reflects the 30 highest dividend-paying REITs in the Asia Pacific.

Phillip SGX APAC Dividend Leaders REIT ETF
Phillip SGX APAC Dividend Leaders REIT ETF Overview (Source: SGX)
  1. NikkoAM-StraitsTrading Asia Ex Japan REIT ETF (SGD: CFA | USD: COI)

12-Month Dividend Yield: 4.74% 

NikkoAM-StraitsTrading Asia Ex Japan REIT ETF is an ETF that tracks the FTSE EPRA Nareit Asia ex Japan REITs 10% Capped Index.

It tracks the performance of qualifying REITs from China, Hong Kong, India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Taiwan, and Thailand.

NikkoAM-StraitsTrading Asia Ex Japan REIT ETF
NikkoAM-StraitsTrading Asia Ex Japan REIT ETF (Source: SGX)
  1. Lion-Phillip S-REIT ETF (SGD: CLR)

12-Month Dividend Yield: 4.86% 

The Lion-Phillip S-REIT ETF is an ETF that tracks the Morningstar Singapore REIT Yield Focus Index.

It is an index that invests purely in high-quality Singapore REITs (S-REITs) screened by Morningstar.

Lion-Phillip S-REIT ETF Overview (Source: SGX)
Lion-Phillip S-REIT ETF Overview (Source: SGX)
  1. CSOP iEdge S-REIT Leaders Index ETF (SGD: SRT | USD: SRU)

12-Month Dividend Yield: 4.75% 

CSOP iEdge S-REIT Leaders Index ETF is a S-REIT ETF that tracks the iEdge S-REIT Leaders Index.

It tracks the performance of the largest and most liquid REITs listed on the Singapore Stock Exchange (SGX).

CSOP iEdge S-REIT Leaders Index ETF Overview (Source: SGX)
CSOP iEdge S-REIT Leaders Index ETF Overview (Source: SGX)
  1. UOB APAC Green REIT ETF (SGD: GRN | USD: GRE)

12-Month Dividend Yield: 4.06% 

The UOB APAC Green REIT ETF mirrors the iEdge-UOB APAC Yield Focus Green REIT index, which aims to allow investors to invest in environmentally-friendly REITs.

UOB APAC Green REIT ETF Overview (Source: SGX)
UOB APAC Green REIT ETF Overview (Source: SGX)

Risks of investing in S-REITs

Risk #1: Interest Rate Risk

Since REITs distribute over 90% of their income as dividends to investors, most REITs will usually take up loans to finance their property acquisitions.

As such, REITs are generally sensitive to interest rate fluctuation.

Simply put, any rise in interest rates will increase the operating cost of REITs as their interest repayment will become higher.

Risk #2: Subject to market fluctuation

Just like other stocks, the price of REITs is also affected by the overall market fluctuation – though S-REITs are usually less volatile.


Are S-REITs for you?

Investing in S-REITs can be a solid choice if:

  • You are looking to build a reliable dividend income stream.
  • You are seeking to diversify your stock portfolio to assets that are less volatile.
  • You are looking to expand your dividend portfolio to earn dividends in SGD.

Best broker to invest in S-REIT: ProsperUs by CGS-CIMB

This educational post is sponsored by ProsperUs by CGS-CIMB.

ProsperUs by CGS-CIMB is a regulated broker from Singapore that gives investors access to 30+ exchanges in more than 8 countries (US, Hong Kong, China, Japan, UK, Singapore, Malaysia, Europe, and more)!

In fact, from just 0.06% – 0.10%/trade (no min. trade value required), ProsperUs offers the most affordable brokerage fee for investors to invest in the Singapore stock exchange!

Exclusive ProsperUs Referral Code – MONEY20

 

ProsperUS referral code

If you are thinking to give ProsperUs a try, here’s something exclusive to No Money Lah readers – you will not find this anywhere else!

From today till 31/12/2022, key in my exclusive promo code ‘MONEY20’ while you register, and get a FREE SGD50 cash top-up & up to RM300 e-wallet credits when you open a ProsperUs account:
p

RewardsHow to qualify
#1 One-time top up of SGD20 into your ProsperUS accountInitial funding of SGD500 within 30 days of your account opening. To qualify, you should not withdraw the SGD500 for at least 30 calendar days.
#2 A further top up of SGD30 into your ProsperUS accountExecute at least 3 trades by 31/1/2023
#3 Up to RM300 in Grab or T&G e-wallet credits RM120: Initial funding of SGD1000 within 30 days of your account opening + 3 trades by 31/1/2023.

RM180: Initial funding of SGD3000 within 30 days of your account opening + 3 trades by 31/1/2023.

RM300: Initial funding of SGD10,000 within 30 days of your account opening + 3 trades by 31/1/2023.

To qualify, you should not withdraw the initial funding for at least 30 calendar days.
Note: A deposit in other currencies of equivalent value will also qualify you for the rewards. eg. Initial funding of ~RM1600 or ~USD400 is equivalent to SGD500.

p.s. Please check for the latest exchange rate accordingly.

Click HERE to view the full T&C of this referral reward.

Open a ProsperUs Account Today!


No Money Lah Verdict

So there you have it – an in-depth guide to invest in S-REIT!

I hope this guide has been useful and if you have any questions, feel free to leave your comment in the comment section below!


Disclaimers

This article is brought to you in collaboration with ProsperUs by CGS-CIMB.

Any of the information above is produced with my own best effort and research. 

This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.

This post may contain promo code(s) that afford No Money Lah a small amount of commission (and help support the blog) should you sign up through my referral link.