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How To Buy REITs in Singapore: Types and How To Invest

how to buy reit in singapore
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You cannot think about investing in Singapore without thinking of investing in real estate. Investing in REITs is the best way to invest in real estate since they are known for their high yields in dividend income. They are a great investment product if you are looking for a passive income stream.

Investing in REITs in Singapore is almost similar to other investments in the SGX; you will need a brokerage account and a CDP account to access the market. You can open a brokerage account with any of the brokerage firms in Singapore.

If it is your first time investing, your brokerage firm will help you submit your CDP account application to the Central Depository. You can also apply for a CDP account in the comfort of your home by downloading and completing the CDP application form. You can get more information from the SGX website.

What Are REITs?

A Real Estate Investment Trust or a REIT is a company that owns, operates, and invests in a real estate asset that generates income by pooling investor capital. They lease out spaces in the property and collect rent in return. The rental income from the properties is the yield that is distributed to the shareholders as dividends.

REITs are traded on the Singapore Exchange, the same way you buy stocks. You also easily buy REITs from brokerage accounts. These financial assets give you access to the global market since most of them have properties in markets overseas.

A REIT must distribute at least 90% of its income every year. REITs can earn you a passive income from your real-estate investment without you having to buy, own or manage the property.

Currently, the SGX has 42 REITs listed. REITs differ from investing in physical property since you do not have to buy the physical property to get the returns when you buy a REIT unit; however, you earn a share of the physical property without buying the physical property.

How Do REITs Work?

REITs allow investors to buy shares in real estate portfolios that were only available for wealthy people before through financial intermediaries. These portfolios may include data centers, complexes, hotels, healthcare, infrastructures such as fiber cables, retail centers, warehouses, and self-storage.

REITs specialize in the real estate sector, and some also specialize in different types of portfolios, such as REITs of both retail and office. They are publicly traded on significant security exchanges where investors can sell and buy REITs the same way they buy stocks. REITs are considered very liquid financial instruments, trading in substantial volume.

Pros and Cons

As it is with anything else, REITs have their advantages and disadvantages. They include:

The Pros

1. Reits Require Low Capital to Invest In

You require low capital to invest in REITs than in physical properties. You can start investing a few hundreds of dollars with REITs while you need hundreds of thousands of dollars with physical property.

2. Reits Are Highly Liquid

REITs are easy to trade on the stock exchange. They can easily be traded the same as stocks. It is simpler than investing in physical property, where the transaction process takes months.

3. Management Team Handles the Tenants

One of the most challenging parts of owning property is dealing with tenants and maintaining the property. With REITs, the management team takes care of the property for the investors, hence taking the most considerable burden off them.

4. You Get to Diversify into Different Properties

Investing in real estate requires a lot of knowledge and experience to do it right. You can easily buy property, but you might not know which one will make you money. REITs also offer retail investors a chance to invest in commercial property that could have been otherwise impossible because of the need for high capital.

REITs allow retail investors to invest in shopping malls, industrial properties, prestigious office buildings, and hospitals.

The Cons

1. High REIT Management Fees

REITs will help you escape the administrative hassles, but you pay for the convenience in the management fees. These fees will often east in your overall returns.

It is important to note that management fees are not paid on an assets valuations basis, but every time a property is acquired.

2. Market Volatility

REIT prices are subject to market volatility since they are traded on the stock exchange. It is different with physical properties since they are not traded, and their price fluctuations are not experienced daily.

3. Low Leverage

REITs can borrow up to 45% of their assets, but they can get a 60% to 80 % loan to valuation ratio for their physical properties.

commercial reits

Types of REITs in Singapore

There are different types of REITs in Singapore. They are classified based on the kind and function of the physical property it holds.

Retail REITs

Retail REITs own shopping malls that most people like to visit often. These REITS are more common in Singapore since shopping malls are common here. Below is a list of retail REITs on the Singapore Exchange.

Name of REIT Geographical exposure Portfolio includes:
BHG Retail REIT China It consists of six retail properties strategically located in major cities in China, including Beijing, Chengdu, Hefei, Xining, and Dalian
CapitaLand Integrated Commercial Trust Singapore – Bugis Junction

– Funan Mall

– Plaza Singapura

– Raffles City

– Westgate

CapitaLand Retail China Trust China Singapore’s first and largest China shopping mall REIT with a portfolio of 13 shopping malls
Dasin Retail Trust China China retail property trust providing direct exposure to the Guangdong-HongKong-Macau Greater Bay Area
Frasers Centrepoint Trust Singapore – Waterway Point

– Causeway Point

– Changi City Point

– Bedok Point 

Lippo Malls Indonesia Retail Trust Indonesia The only Indonesian retail REIT listed on the SGX that owns 30 properties across Java, Sumatra, Bali, and Sulawesi
Sasseur REIT China Outlet mall REIT with properties in Chongqing, Hefei, Bishan, and Kunming
SPH REIT Singapore, Australia – Paragon

– The Clementi Mall

– The Rail Mall

Starhill Global REIT Singapore, Australia, Malaysia, China, Japan – Wisma Atria

– Ngee Ann City

United Hampshire US REIT USA 22 high-quality properties located along the east coast of the USA

Office or Commercial REITs

Office REITs own office buildings. The Marina Bay Financial Centre, Asia Square, Once Raffles Place, and others are good examples. Office spaces are being re-evaluated now that working from home is becoming the norm. However, office spaces do not seem to disappear soon since many jobs still require work to be done on-site.

Name of REIT Geographical exposure Portfolio includes:
CapitaLand Integrated Commercial Trust (formerly CapitaLand Commercial Trust and CapitaLand Mall Trust) Singapore, Germany – Asia Square Tower 2

– CapitaGreen

-Capital Tower

– Six Battery Road

Elite Commercial REIT United Kingdom (U.K.) 40.0% of the Portfolio by  in London, South, and Midlands in the UK
IREIT Global Germany Five freehold offices in Germany and four freehold offices in Spain
Keppel Oak Pacific US REIT USA 13 office properties in 8 markets in the USA
Keppel REIT Singapore, Australia, South Korea – Marina Bay Financial Centre

– Ocean Financial Centre

– One Raffles Quay

Lendlease Global Commercial REIT Singapore, Italy  retail (313@Somerset) and commercial property
Manulife US REIT USA Nine prime, freehold, and Trophy or Class A quality office properties are located in California, Atlanta, New Jersey, Washington, D.C., and Virginia.
Mapletree Commercial Trust Singapore – Mapletree Business City

– Mapletree Anson

– PSA Building

 VivoCity

Mapletree North Asia Commercial Trust China, Hong Kong, Japan Comprises best-in-class commercial properties situated in prime locations in Hong Kong SAR, China, and Japan
OUE Commercial REIT Singapore, Shanghai – One Raffles Place

– OUE Downtown Office

It also owns two hotels, Mandarin Orchard Singapore and Crowne Plaza Changi Airport.

Prime US REIT USA 12 office properties diversified across ten key U.S. office markets
Suntec REIT Singapore, Australia – Suntec City

– One Raffles Quay

– MBFC properties

Hospitality REITs

These REITs own hotels such as budget hotels and upscale hotels. They also own and manage serviced apartments.

Name of REIT Geographical exposure Portfolio includes:
ARA US Hospitality Trust USA 41 upscale select-service hotels across 22 states in the USA
Ascott Residence Trust Singapore, Australia, Belgium, China, France, Germany, Indonesia, Malaysia, Japan, Philippines, South Korea, Spain, USA, United Kingdom, Vietnam – Ascott Orchard Singapore

– Citadines Mount Sophia Property Singapore

– Park Hotel Clarke Quay Singapore

CDL Hospitality Trusts Australia, Singapore, United Kingdom, Japan, Germany, New Zealand, The Maldives, Italy – Orchard Hotel

– Grand Copthorne Waterfront Hotel

– M Hotel

Far East Hospitality Trust Singapore The Far East has three in-house brands: the Village, Oasia, and Quincy.

– Oasis Hotel Downtown

– Rendezvous Hotel Singapore

– The Quincy Hotel

– Village Hotel Bugis

Frasers Hospitality Trust  Australia, Singapore, United Kingdom, Japan, Malaysia, Germany – InterContinental Singapore

– FraserSuites Singapore

Industrial REITs

These REITs own and manage industrial buildings like logistics facilities, warehouses, and distribution centers. These buildings are primarily found in the central business district in Singapore, including Ubi, Jurong, Woodlands, Tuas, and Changi.

Name of REIT Geographical exposure Portfolio includes:
AIMS APAC REIT Singapore, Australia 25 properties in Singapore and two properties in Australia
Ascendas REIT Singapore, Australia, United Kingdom, USA – Changi Business Park

– One-North

– Singapore Science Park 1 & 2

ARA Logos Logistics Trust  Singapore, Australia 27 logistics warehouse properties
E.C. World REIT China Eight properties are located in large e-commerce clusters in the Yangtze River Delta, Hangzhou, and Wuhan, China
ESR-REIT Singapore 57 properties located across Singapore, including Viva Business Park
Frasers Logistics & Commercial Trust  Singapore, Germany, Australia, The Netherlands, United Kingdom Ninety-nine logistics and commercial properties in developed markets.
Mapletree Industrial Trust Singapore, USA 87 properties in Singapore and 27 properties in North America
Mapletree Logistics Trust Singapore, Australia, China, Hong Kong, Japan, South Korea, Vietnam, Malaysia Industrial properties located near major expressways and established logistics clusters in 8 geographic markets across the Asia Pacific
Sabana REIT Singapore 18 industrial buildings

Healthcare REITs

Singapore has an aging population, and with the pandemic, the need for quality healthcare services and healthcare workers is more important than ever. Healthcare REITs own and manage healthcare-related REITs such as senior living facilities and hospitals. We only have two healthcare REITs on the Singapore Exchange.

Name of REIT Geographical exposure Portfolio includes:
First REIT Singapore, Indonesia, South Korea Pacific Healthcare Nursing Home at Bukit Merah Pacific Healthcare Nursing Home at Bukit Panjang
ParkwayLife REIT Singapore, Japan, Malaysia Mount Elizabeth Hospital, Gleneagles HospitalParkway East Hospital

business man holding design model

Top 15 Singapore REITs

In Singapore, there are over 40 REITs listed on the SGX. However, if you are starting to invest in REITs, you will want to start with the most popular REITs in the stock market.

We have used the SGX stock screener data to pick the largest REITs in the Singapore exchange. Here are 15 REITs in Singapore where you will earn the most money. The following table indicates the REIT’s popularity and size.

Singapore REIT Type Market cap
CapitaLand Integrated Commercial Trust Retail, commercial S$14,753m
Ascendas REIT Industrial S$12,223m
Mapletree Logistics Trust Industrial, logistics S$8,306m
Mapletree Commercial Trust Retail, commercial S$7,260m
Mapletree Industrial Trust Industrial S$6,793m
Frasers Logistics & Industrial Trust Industrial, logistics S$5,341m
Keppel DC REIT Data centres S$4,654.394
Frasers Centrepoint Trust Retail S$4,415m
Suntec REIT Commercial, retail S$4,294m
Keppel REIT Commercial S$4,021m
Ascott Trust Hospitality S$3,512m
Mapletree North Asia Commercial Trust Commercial S$3,365m
ParkwayLife REIT Healthcare  S$2,456m
SPH REIT Retail S$2,414m
OUE Commercial REIT Commercial S$2,114m

How Do I Start Investing in REITs?

If you are looking to invest for a passive income, we recommend you start investing in REITs. They are pretty simple to invest in. You can start investing in REITs at any time, the same way you invest in stocks.

Here are the many ways you use to invest in REITs.

Through an Investment Brokerage Firm

REITs are listed on the SGX; you can invest in them directly through a stock trading platform. With a brokerage account, you can start investing in REITs as soon as possible.

Here are the steps to follow:

  • Open an online stock trading platform account
  • Open a CDP account
  • Fund your account through your bank account
  • Start trading.

You can also start investing in REITs through a Central Provident Fund (CPF) Ordinary Account and a Special Savings account through a CPF investment account through an approved CPF Investment Scheme agent.

Buying REIT Exchange Traded Funds (REIT ETFs)

You can also use REITs ETFs to invest in REITs too. A REIT ETF is a fund that tracks a benchmark index like the S&P 500. Several REIT ETFs are listed on the SGX, and each tracks a different benchmark index.

Singapore-REITs can also be investing through a Regular Savings Plan (RSP) like the DBS Invest-Saver. Those who use such platforms have access to units from Nikko AM-StraitsTrading Asia ex-Japan Reit ETF for as low as S$100 monthly.

Buying REIT Unit Trusts

This is the best investing route if you want a third party to invest in REITs on your behalf. Unit trust allows a REIT manager to handle REIT investments on your behalf. Every unit trust has its mandate of investing your money in your REIT portfolio.

A good example is the Manulife GF APAC Reit P SGD unit trust that invests 70% of its assets in the ex-Japan REITs. The unit trust invests 30% of its net assets in real estate companies that are not REITs for diversification.

Invest in A REIT Portfolio

Rather than investing in one REIT at a time, you can invest in a portfolio through a Robo advisor that offers REIT portfolios as part of their packages. A good option is the Syfe REIT+ Portfolio, which replicates the performance of the SGX iEdge S-REIT Leaders Index, which has 20 of the largest REITs in Singapore. The Syfe+ Portfolio has a fee range of 0.4% to 0.65% per annum.

Related Questions

How Do I Choose A REIT To Invest In?

You will first have to open a brokerage account and a CDP account. After that, you can choose the REIT you want to invest in. Here are some factors in selecting the best REIT that fits your financial goals.

1. The Type Of REIT

There are different types of REITs available in Singapore. They range from retail, hospitality, and Health to industrial REITs. The most popular kind of REITs in Singapore are the retail REITs. These own most of the famous malls that you like to frequent.

It is essential to pick a REIT that you are familiar with how the industry works. This way, you can assess how the properties you are investing in make money and see if they will provide a substantial dividend on your investment.

2. Distribution Yield

The distribution yield is how much a REIT can give out. It is the dividend yield as a percentage of the REIT’s prices. The yields are calculated per the unit paid to investors divided by the current share price.

3. The Occupancy Rate

You also need to check if the properties owned by the REITs are occupied. With REITs, the occupancy rate determines the rental income. So the higher the occupancy rate, the higher the rental income and the higher the dividend yield.

4. Quality of the Properties Under the REIT

It is essential to look at the properties under the REIT and where they are located. The best performing commercial properties are located in a central business district with a lot of foot traffic.

What Are the Risks of Investing in REITs?

All investments have their fair share of risks, and the COVID-19 pandemic has been a reminder. Here are the risks involved in investing in REITs.

1. High Market Volatility

REITs are traded on the stock market just like stocks, so they are subject to market volatility. While the market was down-sell due to the COVID-19 pandemic, REITs were among the most hit financial investments, with their prices dropping by almost 30%.

2. Their Distribution Is Not Guaranteed

According to their regulations, REITs are supposed to distribute 90% of their income, but their distribution can fluctuate depending on their income. For example, most shops closed down during the pandemic, which translated to no rental income, hence the lower distribution yields.

3. Economic Uncertainty

The is also economic uncertainty facing the REITs industry, especially after the COVID-19 pandemic. The hospitality industry has been the hit, but things are gradually looking up. REITs are directly dependent on the rental income earned on the properties’ own. If there is no business for the properties, the REITs’ distribution yield will be affected.

Closing

Real Estate Investment Trusts are one of the most popular types of investment in Singapore. This has made Singapore the largest REIT market in Asia, excluding Japan, with a market capitalization of $111 billion. Most investors prefer investing in RETs because they offer relatively high dividends and also provide a passive income for their investors.

Key Takeaways

  • REITs are listed on the Singapore Exchange and can be traded the same way as regular stock.
  • REITs allow investors allow an investor to get access to large and diversified properties in the country.
  • REIT pool funds allow many investors to buy an extensive Portfolio of property.
  • REITs pay more than 90% of their taxable income to their investors.

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