Singapore’s industrial property market remains challenging as industrial space supply is expected to peak in 2017, before tapering off in the next few years.

Green shoots in manufacturing activity data, and the Singapore government’s economic shift, coupled with its focus on higher value-added businesses, bode well for industrial property demand.

SGX lists 11 REITs & Property Trusts which have industrial properties within their asset portfolios. These 11 trusts have generated an average year-to-date total return of 19.0%.

Real Estate Sector Sub-Segment: Industrial Property Market

Industrial Segment Still Challenging but Supply Peaking in 2017

URA data shows that Singapore’s industrial space supply will likely peak in 2017, before tapering off in the next few years. According to JTC Corporation, with more industrial supply coming on-stream in the coming quarters, prices and rentals will come under pressure (click here for more). DBS Vickers Securities believes Singapore’s Industrial sector will likely remain soft in the immediate term and will only start to bottom out from end 2017 on the back of abating supply risk. Specifically, the brokerage expects new industrial supply to decline by close to 50% in 2017 and further in 2019, allowing market rents to stabilise and rise marginally in 2018.

Green Shoots in Manufacturing Activity Bodes Well for Demand

Singapore’s Purchasing Managers’ Index (PMI) was at 50.9 in June 2017, an improvement of 0.1 point MoM (click here), according to data from Singapore Institute of Purchasing & Materials Management (SIPMM). Singapore’s manufacturing sector has now recorded its 10th month of consecutive expansion. A PMI reading above 50 typically indicates that the manufacturing economy is expanding. Additionally, the Singapore government’s economic shift and focus on higher value-added businesses will likely help boost demand for hi-tech factories and business parks. The green shoots emerging in the city-state’s manufacturing activity bodes well for Singapore’s industrial properties.

For more, please refer to the SGX Real Estate sector presentation.

SGX’s Industrial REITs & Property Trusts

 SGX lists 11 REITs & Property Trusts which have industrial properties within their asset portfolios. These 11 trusts have generated an average year-to-date total return of 19.0%, with an average dividend yield of 7%, and average gearing of 34.9%. The five best performers in the year-to-date are Sabana Shari’ah Compliant Industrial REIT (+24.9%), Viva Industrial Trust (+24.3%), Soilbuild Business Space REIT (+21.1%), Cache Logistics Trust (+20.6%) and Mapletree Logistics Trust (+20.2%).

The table below details the Industrial REITs & Property Trusts sorted by market capitalisation:

Name SGX Code Market Cap S$M Price S$ Total Return YTD % Total Return 1 Yr % P/B P/B 5 Yr Avg Gearing % Dvd Ind Yld %
Ascendas REIT A17U 7,474 2.590 17.8 12.6 1.3 1.2 33.4 6.9
Mapletree Industrial Trust ME8U 3,344 1.855 16.6 13.1 1.3 1.2 29.1 6.1
Mapletree Logistics Trust M44U 2,964 1.185 20.2 21.0 1.1 1.0 38.4 6.3
Frasers Logistics & Industrial Trust BUOU 1,592 1.055 20.1 19.2 1.1 N/A 27.8 N/A
AIMS AMP Capital Industrial REIT O5RU 948 1.485 18.0 12.0 1.1 0.9 36.0 7.4
Viva Industrial Trust 1, 2 T8B 876 0.905 24.3 36.0 1.1 0.9 38.8 7.9
Cache Logistics Trust K2LU 843 0.935 20.6 18.0 1.2 1.0 42.9 8.0
ESR REIT J91U 783 0.600 15.1 16.2 0.9 0.9 37.7 6.8
Soilbuild Business Space REIT 1 SV3U 775 0.740 21.1 16.4 1.0 0.9 37.0 8.1
EC World REIT BWCU 629 0.805 10.2 N/A 0.9 N/A 26.9 3.1
Sabana Shari’ah Compliant Industrial REIT M1GU 479 0.455 24.9 6.3 0.8 0.7 35.8 9.2
Average       19.0 17.1 1.1 1.0 34.9 7.0

Source: SGX, Bloomberg & SGX StockFacts (data as of 13 July 2017)

Note 1: Soilbuild Business Space REIT and Viva Industrial Trust are not classified within the Industrial REITs GICS® Sub-industry but majority of their assets are industrial properties.
Note 2: Viva Industrial Trust is a Stapled Trust which is a stapled security comprising of a REIT and a Business Trust.

Previous Market Updates on the Real Estate Sector 

  • 6 July 2017: SGX Real Estate Index Returned 19.5% YTD on Positive Indicators – Click here
  • 13 July 2017: Singapore Private Property Market Shows Signs of Stabilising – Click here

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