Our local REITs have been hammered in recent weeks and I think there are two macro factors which continue to leave an overhang on their path for price appreciation:
- Uncertain economic and demand recovery
- Repricing of rental demand
Uncertain economic and demand recovery
Singapore, being a highly open and export led economy with globally integrated supply chains is facing continued pressure on its economy because COVID-19 has yet to be controlled in many parts of the world.
This dynamic, coupled with slow progress on the vaccine and continued travel bans, is going to put pressure on the pace of demand recovery.
Despite some government intervention to support jobs and alleviate cash flows, with slowing demand, we should continue to expect lackluster demand for office spaces, falling rent reversions, and limited appreciation in property values.
Repricing rental demand
With this elongated recovery schedule and lacklustre demand on both the retail and corporate side, we can expect that rents could fall further to maintain the same level of occupancy....
