Top 3 Singapore REITS To Watch Out For In 2024

Here are my top 3 selections for Singapore REITS to watch and possibly invest in for 2024.

1. Fraser Centrepoint Trust

The first choice for 2024 in the list is Frasers Centrepoint Trust – which mainly owns sub-urban malls here in Singapore. Popular properties in their portfolio include Causeway Point, Northpoint, Waterway Point and Nex.

The reason why Frasers Centrepoint Trust cut my top pick is that fundamentally, the REIT is well managed with a very clear strategy and well-proven record in terms of their property portfolio management.

With the exception of 2020, the distribution per unit has also been very stable over the years and in terms of valuation, I believe that FCT is trading around fair valuation which makes it a viable REIT to consider adding into your portfolio.

2. Parkway Life REIT

The second choice on the list would be Parkway Life REIT – which owns healthcare properties around Singapore and Japan. Popular properties in the portfolio include Mount Elizabeth Hospital and Parkway East Hospital.

The reason why Parkway Life REIT made the cut as the second choice is because they are, in my opinion, one of the best-managed REIT with almost perfect fundamentals. Based on my limited coverage of Singapore REITs at the moment, Parkway Life REIT has been the only REIT that I’ve seen that can grow their distribution per unit via retained earnings instead of diluting their shareholder base.

However, as a result of the rich valuations, I will not invest in Parkway Life REIT at the moment as it wouldn’t make sense to invest in Parkway Life REIT at a yield of around 4% when other REITs are equally stable that may be trading at around 5.5% to 6% yield.

I will however keep a close watch on the price action so that I can start a position when prices are depressed which is why I’ve placed Parkway Life REIT as my second pick.

3. Keppel REIT

The third choice on the list would be Keppel REIT – who owns offices around Singapore and Australia. Popular properties in the portfolio include Ocean Financial Centre, Marina Bay Financial Centre Tower 1, 2 and 3 as well as One Raffles Quay.

The reason why Keppel REIT made the cut is mainly because of its stable distribution behaviour and a severely beaten-down valuation.

While the ship for Keppel REIT had taken off since the Fed announced the end of their rate hike, current valuations for Keppel REIT are still trading somewhere within the fair valuation which could make a good justification for having a position to own popular A grade offices in Singapore if the price and future performance is right.

That being said, investors should pay attention to the DPU behaviour of Keppel REIT in the next five years as it is partially supported by non-operational items such as management fees paid in units and also the $100 million anniversary distribution.

If we strip these items away from the intrinsic valuation calculation, perhaps the price that Keppel REIT is trading at would not make too much sense anymore and as such, at the current price, I would view Keppel REIT as more of a technical pick for the short term rather than to buy and hold for the long term as part of the core portfolio allocation for stable income yield and capital preservation.

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So, these are the top 3 REITs that I will be watching closely in 2024, all of them driven by strong fundamentals that create strong justification to hold for life if the price and valuation are right.

If you want to read more into the companies that I’ve mentioned, you can assess my independent analyst coverage report on these companies via my telegram channel.

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Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).

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