Looking at the prices of property these days, it seems like the only way I can own one is either by striking Toto or having rich parents.
But is owning property in Singapore really such a far-off dream?
If you’re still dreaming of being a landlord, where you can earn a steady stream of passive income from charging rent, there’s another way that lets you own property and earn money from it.
We’re talking about real estate investment trusts, better known as REITs, of course. Here’s how you can own a stake in several types of properties in Singapore through REITS.
Understanding Singapore REITs
- What are REITs and how do they work?
- Why investors love S-REITs
- Features and Types of REITs in Singapore
- REIT ETFS in Singapore
- REITs vs. Buying Property / T-bills
- How to start investing in REITs
1. What are REITs and how do they work?
Real Estate Investment Trusts (REITs) are a type of investment instrument in which the underlying asset is property. REITs manage and rent out various properties, and income from the rental is paid to their shareholders as dividends.
In Singapore, REITS are listed on the Singapore Exchange, known as S-REITs. When you invest in REIT, you’re investing in the properties managed by that REIT. In a sense, you become part-owner of those shopping malls, business parks, or whatever it is the REIT manages.
Even if you’re a total beginner to investing, you’re probably already familiar with some REITs. For example, CapitaLand Integrated Commercial Trust (CICT), a retail/commercial REIT, is one of the best known in Singapore thanks to its string of “cloned” shopping malls
Another name that might ring a bell is CapitaLand Ascendas REIT, known for managing prominent business parks like Science Park and Changi Business Park, and increasingly recognised for its expanding portfolio of data centres—a rapidly growing segment in today’s digital economy.
2. Why investors love S-REITs
REITs are one type of investment that gives you steady passive income through dividends. Depending on the type of REIT, dividends are usually paid out quarterly or semiannually.
And these dividends are pretty high, with an average of 5%–7% distribution yield.
But how is it possible for yields to consistently be so high? It’s because S-REITs are required by law to redistribute at least 90% of their taxable income each year, i.e. pay it out in dividends. That’s why many investors like S-REITs—for the (more or less) steady recurring income.
But note that the share price of a REIT can go up and down, just like regular stocks, and your dividend payout can drop at times. For more in-depth information on how REITs work, you can read more about them on the Moneysense website.
3. Features and types of REITs in Singapore
So, what type of REITs do we have in Singapore? There are 40 REITs listed on the Singapore stock market, where about 80% of them have exposure to foreign markets outside Singapore, including Asia, Europe and the US.
S-REITs are also highly diversified, with properties across various sectors such as healthcare, hotel and resorts, industrial, office, residential, and retail.
Using data from SGX Stock Screener, we picked the 15 largest REITs by market caps, which is how much money these REITs are currently worth.
Singapore REIT | Stock code | Type | Market cap |
CapitaLand Integrated Commercial Trust | C38U | Diversified | S$15,293m |
CapitaLand Ascendas REIT | A17U | Industrial | S$11,661m |
Mapletree PanAsia Commercial Trust | N2IU | Diversified | S$6,220m |
Mapletree Logistics Trust | M44U | Industrial | S$5,633m |
Mapletree Industrial Trust | ME8U | Industrial | S$5,504m |
Keppel DC REIT | AJBU | Specialised | S$4,941m |
Frasers Centrepoint Trust | J69U | Retail | S$4,449m |
Keppel REIT | K71U | Office | S$3,298m |
CapitaLand Ascott Trust | HMN | Hospitality | S$3,266m |
Suntec REIT | T82U | Diversified | S$3,320m |
Frasers Logistics & Commercial Trust | BUOU | Diversified | S$2,997m |
Frasers Hospitality Trust | ACV | Hospitality | S$1,339m |
ParkwayLife REIT | C2PU | Health Care | S$2,655m |
ESR REIT | 9A4U | Industrial | S$1,781m |
OUE REIT | TS0U | Diversified | S$1,514m |
4. REIT ETFs in Singapore
Apart from the individual REITs listed above, there are also REIT ETFs in Singapore.
Just like your regular Exchange Traded Funds (ETFs), which track an index, sector, commodity or other asset, REIT ETFs track the property sector.
In Singapore, there are 5 REIT ETFs:
Singapore REIT ETF | Stock code (SGD) / (USD) | Location of underlying assets | Assets Under Management |
Lion-Phillip S-REIT ETF | CLR | Singapore | S$543m |
NikkoAM- StraitsTrading Asia Ex Japan REIT ETF | CFA / COI (USD) | Singapore, Hong Kong India, Malaysia, South Korea, Thailand, and Philippines | S$428m |
CSOP iEdge S-Reit Leaders Index ETF | SRT (SGD) / SRU (USD) | Singapore | S$85m |
UOB APAC Green Reit ETF | GRN (SGD) / GRE (USD) | Japan, Australia, Hong Kong, Singapore | S$28m |
Phillip SGX APAC Dividend Leaders REIT ETF | BYJ (SGD) / BYI (USD) | Australia, Singapore, and Hong Kong | S$10m |
If you’re new to the REIT market and are not sure how to pick individual rates, a REIT ETF may be more suitable for you, as they track the performance of the REIT indexes they are benchmarked against.
This gives you overseas exposure to the Asia Pacific region and diversified property portfolios, and even green REITs through the UOB one.
5. REITs vs. Buying Property / T-bills
Still not sure about REITs and thinking of putting your money in other types of investments? Well, there’s no stopping you if you have enough on hand and want to diversify your portfolio. Here’s how REITs compare to other types of investments:
REITs | Property | T-bills | |
Risk level | Moderate | Low | Low |
Upfront cost | Low | High | Low |
Level of engagement | Passive | Passive | Passive |
Avg Yield (per annum) | ~5-7% | ~7-10% | ~2-4% |
Liquidity | High | Low | High |
6. How to start investing in REITs
What we like most about REITs is that they’re a relatively passive investment. There’s no need to monitor the stock market every day; just put in money and then sit back and collect dividends. Great for beginner investors or those who are too busy to monitor the stock market.
Even if you’ve never bought a REIT or stock in your life, you can invest in REITs at any time.
Ready to start investing in REITs? Here’s what you need to know:
Step 1: Open an online brokerage
You’ll first need an online brokerage to buy Singapore REITs. Remember to check which brokerage has the lowest fees, which charges the lowest for commissions, etc.
Step 2: Select the REIT or REIT ETF you wish to buy
Once you’ve opened your brokerage account, you can choose the REIT you wish to buy. Do you want to focus solely on the Singapore REIT market, do you want more overseas exposure or a mix of both? What about the sectors that you want?
Step 3: Decide on the method of investment
You can decide if you want to put in a lump sum amount into your chosen REIT or do dollar-cost averaging—setting a monthly payment so that you’re constantly investing in the REIT during the good and not-so-good times.
Once you’re done, you now officially own a share of property! If you need more information on REITs, visit https://www.sgx.com/campaign/singapore-reits, which has a wealth of resources on REITs, as well as occasional seminars for beginners and savvy investors alike.
Found this article useful? Share it with a fellow REIT investor.
About the author
Audrey Ng is a bargain hunter who tries to sniff out the best deals possible whether it’s food, shopping or travel. She will out auntie the auntiest of aunties.
This post was written in collaboration with SGX. While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence.
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