Here's how SREITs deal with the impact of rising labour costs

Expect stable NPI margins.

DBS hosted S-REITs from the industrial, hospitality and retail sectors at the recent bi-annual DBSV Pulse of Asia Conference. DBS noted that against a backdrop of questions about higher interest rates and borrowing costs, labour crunch and slowing economic growth in Asia, the REITs remained generally upbeat about occupancies and rents, citing still-strong tenant performance and positive rental reversions as indicators of organic growth going forward.

DBS noted that most REITs are managing the impact of rising labour cost on their operating expenses well. This should translate into stable NPI margins.

Industrial REIT tenants are looking to automate operations rather than hire additional labour, which should help to improve productivity and reduce their dependence on labour.