We live in a changed world for businesses and real estate investment trusts (REITs) alike.
On Friday evening, US President Trump threatened to impose a 50% tariff on European Union goods entering the US.
By Sunday, just two days later, he agreed to postpone the tariff to 9 July 2025.
This is the economic reality we live in today, where the rules change from one day to the next.
It’s no wonder DBS Group (SGX: D05) CEO Tan Su Shan said that it was the first time she heard every CEO she met utter these three words: “I don’t know”
Think about the implications for a moment.
This is a message from company leaders, many with far more financial resources, far more manpower, and far more information than individual investors.
And yet, they are not much closer to knowing what will happen next.
Hence, as investors, you are better off accepting what you don’t know, all the things beyond your control, and focusing on the things which are still within your control.
There are three things in my mind you can focus on:
Start with a great REIT
Behind every real estate investment trust is a collection of properties.
The bedrock of any successful REIT investment is the quality of the REIT itself.
A great REIT can grow its rental income, manage its debt levels well, generate a fair profit, and share the spoils with unit holders.
Hence, choosing a great REIT provides your first layer of protection.
When the market faces challenges, a leading REIT is better positioned to weather the storm.
Think of it like this: even with added difficulty, the strongest competitor often prevails.
Prioritise established REITs with a history of solid performance.
Keep an eye on how much you buy
Beyond picking a great REIT, consider how much of it to buy.
It’s easy to overcommit when unit prices drop, but that can lead to an unbalanced portfolio or depleted cash reserves.
Avoid buying simply because prices are low.
Instead, purchase based on your conviction in the REIT’s long-term value.
A simple rule of thumb: If you’ve been studying a REIT for a year, invest no more than one per cent of your portfolio into it.
For five years, up to five per cent.
Adjust these percentages to align with your risk tolerance and knowledge.
Keeping an eye on your allocation for each REIT provides another layer of protection.
Spacing out your buys based on risk
Next, spacing out your additional buys allows you to observe the REIT’s performance before further investment.
If the REIT is new to you, consider longer intervals, such as a year or two, between purchases.
Track records vary significantly.
Established REITs like ParkwayLife REIT (SGX: C2PU) and CapitaLand Integrated Commercial Trust (SGX: C38U) have decades of performance history, while newer ones like Digital Core REIT (SGX: DCRU) have shorter track records.
Then, there are upcoming REITs such as Japan’s Nippon Telegraph and Telephone (NTT) data centre listing, which will be completely new.
Size and space our your investments accordingly,.
Get Smart: Be YOUR best asset
Ultimately, you must accept that you can’t predict everything.
Policy changes and market volatility are inevitable.
Your strongest tool is a level-headed approach.
Cultivate the ability to remain rational and make calculated decisions amid uncertainty.
This, in my eyes, is the most valuable investment you can make.
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Disclosure: Chin Hui Leong owns shares of DBS Group, CapitaLand Integrated Commercial Trust and ParkwayLife REIT.
