Since the 2007-2009 recession, countries around the world’s interest rates were lowered to very low levels to stimulate each countries’ economies.
Many economies have recovered, but some have not. But the common trait is that around the world inflation have creep up. Sooner or later countries have to increase the interest rates to combat that.
When it comes to Singapore REITs,
most of the reits survived and more properties have been securitized as REITs.
The one advantage taken by REITs is to re-finance debts at lower interest rates. Not able to re-finance debts was a big problem for REITs during the credit crisis.
Pros of rising interest rates
When interest rates rise, it generally also means that the economy is growing.
- Rent revision up
- More yield accretive assets
- Current Assets rise in value
- Rising interest rates reduces the propensity to build new properties thus reduces supply
Cons of rising interest ...
...
