Singapore has established itself as Asia’s hub for real estate investment trusts (REITs).
As of 31 January 2024, Singapore’s REIT (S-REIT) sector was worth US$100 billion, accounting for 12% of the Lion City’s total stock market capitalisation.
This figure is significantly higher than other Asian countries, such as Japan (3.5%), Hong Kong (3.3%), China (3.2%), Malaysia (2.4%), and India (1.8%), highlighting the importance of the S-REITs sector to the local bourse.
The most closely watched REIT index in Singapore is the iEdge S-REIT index.
This index tracks the performance of a basket of S-REITs and is regarded as Singapore’s benchmark for the sector.
The heavyweights of the S-REIT sector
The iEdge S-REIT Index is weighted by market capitalization.
While the index comprises 31 REITs, the top 10 largest companies exert a disproportionate influence due to their substantial market value.
Let’s delve into the 10 biggest constituents of the index.
The Big 10 REITs in Singapore
The top 10 REITs make up the lion’s share of the iEdge S-REIT index, accounting for nearly 70% of its weightage.
Notably, the two largest REITs, namely CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT, and CapitaLand Ascendas REIT (SGX: A17U), or CLAR, share a common sponsor, CapitaLand Investment Limited (SGX: 9CI).
As of 31 July 2024, CICT sports a market capitalisation of S$13.5 billion while CLAR weighed in at S$11.9 billion. Together, they account for over a fifth of the iEdge S-REIT index.
Incidentally, both are also key components in Singapore’s Straits Times Index (SGX: ^STI).
Another CapitaLand-affiliated REIT, CapitaLand Ascott Trust (SGX: HMN), accounts for 4.32% of the index’s weightage.
Beyond CapitaLand, Beyond CapitaLand, the Mapletree group also significantly contributes to the index with three REITs: Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U) and Mapletree Pan Asia Commercial Trust (SGX: N2IU).
Collectively, these Mapletree REITs contribute more than a quarter of the index’s weightage and boast a combined market capitalization of nearly S$20 billion.
Like CICT and CLAR, all three Mapletree REITs are also part of Singapore’s STI.
Joining the CapitaLand and Mapletree REITs in the top 10 are the Frasers pair, Frasers Centrepoint Trust (SGX: J69U), or FCT, and Frasers Logistics and Commercial Trust (SGX: BUOU), or FLCT.
Together, they are valued at around S$7.5 billion, account for close to 10% of the index’s weightage and are also part of the STI.
Rounding out the list is another pair from Keppel, namely Keppel DC REIT (SGX: AJBU) and Keppel REIT (SGX: K71U). The two REITs contribute roughly 9.6% of the index weight and sport a combined market cap of around S$6.8 billion.
The hope and pain of interest rates
As a whole, the Top 10 REITs in the iEdge S-REIT index provides investors with exposure to the traditional property sectors such as industrial, retail and commercial.
Interest rates have been a bane to the industry since late 2022.
However, there could be light at the end of the tunnel with the US Federal Reserve signalling a possible interest rate cut soon.
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Disclosure: Chin Hui Leong owns shares in CapitaLand Ascendas REIT, Capitaland Integrated Commercial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Mapletree Pan Asia Commercial Trust, Frasers Logistics and Commercial Trust, Frasers Centrepoint Trust, and Keppel DC REIT.
