REITs with high exposure to these regions will see much higher yields

They will dodge Singapore’s ongoing slowdown.

Persistent supply glut in the domestic commercial, industrial, retail and hospitality spaces are bugging the city-state’s REITs. Those who opt to diversify to certain regions, however, will be able to ward off this crisis.

According to analysts from UOB Kay Hian, REITs with relatively more exposure to Japan, Hong Kong and Europe will see a significant pick-up in their forward yields.

“We like deep value and well-diversified REITs with a significant overseas footprint, namely ART, CCT and MLT,” UOB Kay Hian said.

Meanwhile, those with exposure to Indonesia, Malaysia and China are likely to see a drop.

“Well-diversified counters MLT, ART, CDREIT and FHT benefit in terms of hedged forward trading yields vis-à-vis forward trading yields. ART will see a 57bp pick-up on a hedged forward yield basis while FHT and CDREIT see 21bp and 21bp pick-ups respectively. MLT will see a 16bp pick-up compared with flattish pick-ups among its peers,” UOB Kay Hian added.

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