Real Estate Investment Trusts (S-REITs) caught my attention last year due to their promise of steady dividends and exposure to Singapore’s robust real estate market.
However, my experience with S-REITs in 2024, coupled with recent market insights, has left me cautious about diving back in.
In March 2024, I ventured into S-REITs, carefully selecting trusts to align with my goal of generating passive income while avoiding excessive risk.
I deliberately steered clear of REITs with significant China exposure due to concerns about economic uncertainty and geopolitical risks in that market. My portfolio included:
These choices were driven by their strong fundamentals, diversified portfolios, and reputable sponsors like CapitaLand and Frasers, which are well-regarded in Singapore’s REIT landscape.
For instance, CICT, with its S$26 billion portfolio and recent acquisition of a 50% stake in ION Orchard, seemed like a solid bet for stable rental income.
Similarly, MIT’s focus on industrial properties, which have shown resilience with positive rental reversions of 20.6% in 2024, appealed to me for its growth potential.
However, by November 2024, I noticed a troubling trend: despite consistent dividend payouts averaging around 6.9% across S-REITs, the capital value of most of my holdings was depreciating.
The broader S-REIT market, as tracked by the iEdge S-REIT Index, had faced challenges, with a -6.28% total return in 2024 compared to the Straits Times Index’s 23.53%.
Frustrated by the declining unit prices, I decided to sell all my REITs except MIT, redirecting the funds into trading for potentially higher returns. The results were mixed:
- FLCT: Took a S$150 loss, a reminder that even diversified REITs can underperform.
- Others: Generated small profits, which softened the blow but didn’t inspire confidence.
- MIT: I held onto it at S$2.22 per unit, but as of June 2025, it’s trading at S$1.96, reflecting a paper loss.
The decision to sell was driven by my need for capital preservation and a desire to explore more dynamic investment strategies.
Trading offered the flexibility to capitalize on short-term market movements, which felt more aligned with my risk appetite given the volatility in the REIT sector.
Source: The Fifth Person
Expert Sentiments and The Fifth Person’s Optimism
The Fifth Person’s recent YouTube video on S-REITs provided a fresh perspective that’s both intriguing and challenging to my current stance.
They argue that with interest rates likely peaking and expected to decline in 2025, S-REITs are poised for a rebound. Lower interest rates reduce borrowing costs for REITs, which often carry significant debt, and make their dividend yields (averaging 6.9% as of February 2025) more attractive compared to Singapore’s 10-year government bonds at 2.7%.
Their optimism is echoed by some market analysts. For example, The Business Times reported a 5.9% climb in the iEdge S-REIT Index from April 11 to 24, 2025, following a sell-off, suggesting a recovery driven by REITs with international and hospitality exposure.
Experts also highlight the resilience of certain S-REIT subsectors. Industrial REITs, like MIT, have shown strong performance, with rental reversions of up to 27.1% in Q4 2024 for trusts like Sabana Industrial REIT.
Diversified REITs, which make up over a quarter of the market, offer stability through mixed asset portfolios, with CICT’s 3.4% net property income growth in FY2024 as a prime example.
Additionally, the Monetary Authority of Singapore’s relaxed regulations and tax incentives, such as tax transparency for REIT ETFs, enhance the sector’s appeal.
Morningstar analysts suggest that the current interest rate environment offers a good entry point, particularly for REITs trading at discounts to their net asset values (NAVs), which many S-REITs do at 5-15% below NAV.
However, not all sentiments are bullish. The same Fifth Person video acknowledges the sector’s struggles, with some REITs, like those exposed to U.S. offices (e.g., Manulife US REIT), facing challenges due to declining occupancy rates.
The “Trump Tariff Tantrum” in April 2025 caused a -4.14% drop in S-REITs, though they outperformed banks during this period.
This volatility reinforces my hesitation, as the market’s “lowest ever” prices in 2024, which many thought couldn’t go lower, have continued to decline into 2025.
Why I’m Still Hesitant
Despite the optimistic outlook from The Fifth Person and some analysts, I’m not ready to reinvest in S-REITs. The market’s volatility, exemplified by my MIT holding dropping from S$2.22 to S$1.96, makes me wary.
Last year, experts claimed S-REITs were at their lowest, yet prices have continued to slide, undermining confidence in predictions of a rebound.
While the prospect of falling interest rates is appealing, macroeconomic uncertainties—such as potential tariff impacts and global economic slowdown—could still pressure REIT valuations.
For instance, Syfe notes that REITs thrive in stable or falling rate environments with low inflation, but any unexpected economic shocks could disrupt this.
Moreover, my financial goals, shaped by paying off my HDB and reaching the Full Retirement Sum in May 2025, prioritize flexibility and higher-risk opportunities.
Trading has allowed me to leverage my capital more actively. S-REITs, while offering passive income, feel too static for my current strategy, especially given their recent underperformance compared to alternatives like Singapore banks, which delivered stellar returns in 2024.
For now, I’ll hold onto my MIT units, hoping for a recovery, but I won’t add to my S-REIT holdings until volatility subsides and clearer signs of a sustained uptrend emerge.
