S-Reits’ yields remain compelling for defensive investors amid market volatility

The ongoing uncertainty due to tariffs and trade tensions has caused significant volatility in global markets over the past week, as investors take a risk-off approach.

Singapore real estate investment trusts (S-Reits) have not been spared from the weaker sentiment, with a large sell-off last week, even though a temporary reprieve from certain tariffs was announced on Apr 9.

Since the “Liberation Day” tariffs were announced by US President Donald Trump on Apr 2, the iEdge S-Reit Index has fallen 7.5 per cent as at Apr 10, reversing the positive performance seen last month.

Even so, Singapore’s Reit benchmark has fared better than other major stock indices over the same period.

By comparison, the broader Straits Times Index (STI) fell 9.5 per cent between Apr 2 and 10, while Hong Kong’s Hang Seng Index and the broad-based S&P 500 on Wall Street were down 11.3 per cent and 7.9 per cent, respectively, in Singdollar terms.

While a broad economic slowdown globally would undoubtedly affect all sectors, S-Reits may offer investors some shelter, given their weak correlation with US and global equities.

The sector currently trades at a relatively high distribution yield, offering investors the prospect of income at a time when most other assets are facing significant uncertainty.

As at Apr 10, the average trailing 12-month yield from the S-Reits that currently pay distributions rose to 7.3 per cent, up from 6.9 per cent as at end-February.

S-Reits that primarily hold overseas assets, such as Sasseur Reit, Elite UK Reit, Stoneweg European Reit and CapitaLand China Trust currently rank among those with the highest distribution yields.

The iEdge S-Reit Index currently trades at a 12-month distribution yield of around 6 per cent, above its five-year historical average of 5.2 per cent, Bloomberg data showed.

As global markets whipsawed over the past week amid various tariff headlines, retail investors were net buyers into the S-Reits sector, in a possible sign of yield-hunting.

Between Apr 7 and 10, retail investors net bought S$92.5 million in S-Reits, with four trusts making the top 10 net retail buying leader board, including Mapletree Logistics Trust (MLT), CapitaLand Ascendas Reit (Clar), Suntec Reit and Mapletree Industrial Trust.

Institutional investors were net sellers of the sector over the same period, with net outflows of S$42.7 million. MLT, CapitaLand Integrated Commercial Trust (CICT) and Suntec Reit were among those with the highest net institutional outflows.

However, two trusts – Frasers Centrepoint Trust and Clar – ranked among the top 10 in terms of net institutional inflows over the four trading days.

There were four trusts that booked both net institutional inflows and net retail inflows between Apr 7 and 10 – Clar, Lendlease Global Commercial Reit, CDL Hospitality Trusts and CapitaLand Ascott Trust.

Apart from directly investing in individual S-Reits, some investors have also chosen to use exchange-traded fund (ETF) channels. Among the five Reit ETFs listed on the Singapore Exchange, the NikkoAM-StraitsTrading Asia ex Japan Reit ETF and Lion-Phillip S-Reit ETF saw the largest inflows, with a combined net creation of S$25 million in new units between Apr 2 and 10.

During this period, the combined daily trading turnover of the five Reit ETFs exceeded S$10 million, tripling the average daily turnover in March 2025.

Analysts recommend that investors stay defensive in their allocation to S-Reits. Ongoing uncertainty from tariffs may impact some sub-segments more than others, either from portfolio geographic exposure or the nature of their assets, with those in consumer discretionary segments more vulnerable.

UOB Kay Hian analyst Jonathan Koh said earlier this month that the most defensive S-Reits are those exposed to suburban retail, healthcare and data centres. S-Reits with long weighted average lease expiry or lower gearing ratios could also prove more resilient, and his top picks include CICT, ParkwayLife Reit and Digital Core Reit. SGX RESEARCH

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the S-Reits & Property Trusts Chartbook.