The Singapore REIT market has grown from just 1 in 2004 to 37 in 2017. For someone new to investing, how can one decide on what REIT to invest when there are so many?
In this post, I introduce the 6 types of REITs in Singapore and a few tips on how get started with investing.
The 30,000 feet view
First, the 30,000 feet view on the Singapore REIT market.
There are 6 classes of REITs in Singapore and pictures speak a thousand words so here they are –
If you didn’t catch that, they are offices, shopping malls (retail), industrial (warehouses, business parks, logistics centres), hospitality (hotels, serviced apartments), healthcare (hospitals, clinics), data centres.
Essentially, a REIT in Singapore falls into one of these few categories.
I’ve listed them in this order because of their popularity.
You’ll see more office buildings, shopping malls and industrial buildings than hospitals or data centres.
Great, I know the big picture. Now, tell me how do I decide on which sector to go into?
Now, that’s a question only you can answer. But I’ll give you some tips.
What are you more familiar with?
If you’re like the general population, you’ll be most familiar with office buildings and shopping malls. Possibly hotels. Hopefully not hospitals. The digital and IT savvy folks may be familiar with data centres.
Invest in what you’re familiar with! – Warren Buffet –
For starters, most people wouldn’t be investing in industrial or healthcare REITs. These are more specialized in nature.
Until such time as you’re more familiar with how a REIT works, what metrics are important to look at and how to get a good sense of a REIT’s performance, stick to what you know.
Like shopping mall REITs, or a REIT that owns the office building you work at.
Why is important to know about which category a REIT is in? That’s because the properties owned by the REIT produce $$, and these $$ goes into your pocket.
Simplistic, but that’s the general idea.
Great, I know the 6 sectors that REITs can be classified into. I want to invest. What REITs can I invest in?
Glad you asked.
We’ll zoom in to 10,000 feet.
The 10,000 feet view
Let’s take a look at the REITs in each of these sectors.
- CapitaLand Commercial Trust
- Frasers Commercial Trust
- IREIT Global
- Keppel REIT
- Manulife US REIT
- OUE Commercial REIT
- Suntec REIT
- BHG Retail REIT
- CapitaLand Mall trust
- CapitaLand Retail China Trust
- Fortune REIT
- Frasers Centrepoint Trust
- Lippo Malls Indo Retail Trust
- Mapletree Commercial Trust
- Mapletree Greater China Comm Trust
- SPH REIT
- Starhill Global REIT
- AIMS AMP Capital Industrial REIT
- Ascendas REIT
- Cache Logistics Trust
- EC World REIT
- Frasers Logistics & Industrial Trust
- Mapletree Industrial Trust
- Mapletree Logistics Trust
- Sabana REIT
- Soilbuild REIT
- Viva Industrial Trust
- Ascendas Hospitality Trust
- Ascott Residence Trust
- CDL Hospitality Trusts
- Far East Hospitality Trust
- Frasers Hospitality Trust
- OUE Hospitality Trust
- First REIT
- Parkway Life REIT
- Keppel DC REIT
That’s quite a handful. 37 in total.
Like I mentioned earlier, go for the sectors you’re familiar with.
Let’s see, I suppose most people are familiar with shopping malls. Now which REIT in the shopping mall category are you familiar with?
CapitaLand Mall Trust that’s for sure. You’ve definitely stepped into one of their malls this week.
They own these malls. Any look familiar? Yeah you bet.
So I earlier asked about why you should be familiar with the category a REIT is in.
The second part to the answer is that – you’ll want to know how Junction 8 or Plaza Singapura is performing, because if they’re lousy malls, they won’t be producing $$, which won’t be going into your $$.
Since you’ve recently been to a CapitaLand Mall, you’ll have an idea of how the tenants are performing, if there are people visiting the malls and if Gudetama Cafe is there (no, it’s in Suntec City Mall, owned by another REIT, Suntec REIT, but that’s a topic for another day).
This is roughly the approach you should take when deciding on which REIT to buy.
The further down we go from 10,000 feet, the more technical it becomes, but that’s for another day.
- Stick to the REIT category you know. There are 6.
- Be familiar with the properties the REIT owns. Now go out and start walking (and shopping).
Share with us
Have you bought any REITs before?
How did you decide on buying one and not the other?
If you find the above interesting and would like to get started on investing in REITs, we would love to be with you on the journey. One place you can get started on finding out more is our REIT data tracker and list of property and REIT events.
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