This Befuddling Singapore REIT Performance
The Singapore REITs have been rising steadily over these few months.
Not all of them.
If you check out the REITs on my Dividend Stock Tracker, the hospitality REITs, Office REITs and the large market capitalization REITs have been doing well.
Their dividend yields have compressed to a level that many investors would term it as overvalued.
The larger capitalization office REITs have yields of 4-4.4%, which is like 2% above the 10 year Singapore government bond rates. I think this is not uncommon.
For sometime, Singapore REITs have command a larger yield spread over risk free government bonds than their peers in other countries.
So this move is actually in line.
Perhaps Singapore REITs is finally playing catch-up to the other countries as previously, we have a fundamental demand and supply, as well as challenging economic outlook that places a cap on future REIT performance.
In Singapore, we know the 10 year rates have been compressing, as evidence by the Singapore Savings Bonds yield published not too long ago.
However, US longer term rates seems to be expanding well. Based on my interpretation, it seems to indicate lower long term demand, a healthier appetite still for equity growth.
Australia Rates look to be expanding as well.
The USA Vanguard REIT ETF have been in a corrective mode since new year.
I do not have the data from a Autralian REIT ETF, but from the main REITs, they too are reacting to higher rates finally.
All this seem to point to the idea that, while Singapore REITs might be less correlated with other REIT markets eventually they might follow the same direction.