Can Ascendas weather Singapore’s tough REIT environment?

Business parks are to drive its growth, analysts say.

Singapore’s real estate investment trust (REIT) environment is filled with headwinds, but analysts say Ascendas REIT has the best supply/demand dynamic among Singapore’s REITs.

According to a report by Maybank Kim Eng, business parks and high-spec are expected to drive the firm’s growth.

“We like it for the following reasons: Business park and high-spec space, where AREIT has c.62% exposure, will go into short supply from 2017 onward,” the report said.

“Government support for R&D, biomed, infocomm, advanced manufacturing, technology, and start-ups under the SGD19b Research Innovation & Enterprise programme, will drive demand for business parks & high-spec,” the report added.

Meanwhile, Maybank Kim Eng said as Ascendas has 12% vacancy in this space, capacity upside in 2017 and 2018 drives the firm’s DPU growth.