To The Moon

Singapore

FY25-26F to see 3.4% DPU growth rebound due to gradual rate cut as rates and refinancing costs are peaking; Following market volatility arising from Trump’s tariff war, it supports of defensive and resilient S-REIT exposures

Retail

•      Rebound in retail sales by 10-15% beyond pre-Covid levels

•      Lack of supply will be a driver

Office

•      Limited new supply in CBD/fringe

•      Limited demand for expansion

•      Grade A offices see firms relocating there

Industrials

•      Factory rents show resilience with falling supply; data centres gain from net under-supply

•      Warehouses face challenges due to rising supply completions; business parks may see rent downturns

Hotels/Residential

•      Hotel RevPAR rebounded but is reaching upper limit

•      Corporate travel / MICE to return though affected by high base in 1H24

Australia

REITs earnings growth to become positive in 2025 and speed up in the next 2 years; 100bp cash rate cuts expected in 2025 would cause 10Y bond yields to fall back to low 4% range

Retail

•      Sales growth forecasted to speed up in 2025

•      Robust tenant and leasing demand drive positive re-leasing spreads

Office

•      Have passed the worst with fundamentals bottoming

•      Currently trade on significant implied devaluations and higher implied cap rates

Industrials

•      Demand/supply to normalise after 3 years of robust performance

Hotels/Residential

•      Cautious near-term residential outlook -- affordability impacting sales volumes

•      Positive long-term fundamentals – likely volume recovery from more RBA rate cuts

Hong Kong

Due to rising stagflationary risks as a result of Trump’s trade war, markets are pricing in multiple rate cuts which could support FY25 DPU; REIT Connect development could lead to sector re-rating once materialised

Retail

•      Link REIT’s tenant sales decline is narrowing, earnings are resilient

Japan

While rising 10Y JGB yields are capping J-REIT’s upside, as REITs have been diversifying repayment deadlines and fixing interest rates, profit growth driven by inflation is expected to exceed higher interest costs; Bullish on hotel and retail subsectors due to rising inbound tourism arising from Asia’s growing middle class

Retail

•      CBRE is most bullish

•      Driven by Japan’s positive wealth effect and rising inbound tourism

Office

•      Falling vacancy rates given return to office

•      Flat rent growth expected in 2025-2026 due to rise in supply; rent then rise 5-6% higher than now by end-2028

•      Preference for good locations led to rent disparity

Industrials

•      Robust logistics demand from 3PL and corporate inventory growth

•      But, Greater Tokyo’s logistics vacancy rate has risen to 10% due to supply (though 2025 forecasts predicts less new supply)

Hotels/Residential

•      Robust hotel demand from surging inbound tourism

•      Tight supply as hotel construction is hindered by rising costs and labor force issues

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