Whats Next For Singapore REITs In 2025

2024 has been a rough year for REITs with the impact of rising interest rate decimating both the DPU of REITs as well as any investor confidence that is left with this instrument class. Overall, the iEdge REIT index saw another 11% draw down in 2024 following a year of consolidation in 2023.

In 2025, what can investor expect following the major narrative of Trump 2.0 and the 3 rate cuts from the US federal reserve which is set to trigger a lower borrowing cost environment moving forward?

In this article, I’ll share my opinion on my expectations for the REITs market in 2025, how the two major narratives will shape the fundamentals of Singapore Listed REITs and what this would mean to us as investors.

Rate Cuts: Yes...But

While it is true that interest rates in the United States are expected to cut around 0.75% in 2025, I don’t think us as investors should be that hopeful that the impact of the lower borrowing cost environment would be felt immediately in the fundamentals of the REITs.

As I’ve previously mentioned in my article last June – [Rate Cuts] Is It A Good Time To Invest In REITs? – even as interest rates decrease and borrowing cost falls, most of the REITs that are listed in Singapore have already refinanced at a much higher rate during 2023 and 2024.

As most Singapore listed REITs have an average debt maturity of around 2 to 3 years, the majority of the REITs are not due for refinancing anytime soon and even if they are, the debts that are due for refinancing in 2025 would not form the majority of the overall debt level that the REITs are exposed to.

What this means is that for the lower interest rate environment to have a positive impact in the distribution of the REITs, it is likely we will see that materialize in 2026 or 2027. That said, investors can expect the average borrowing cost of the REITs to stabilize in 2025 which should translate to a more stable DPU behaviour as opposed to the back-to-back decline in DPU that we’ve experienced in 2023 and 2024.

Trump 2.0: Industrial REITs Watch Out

With the inauguration of Trump on 20th January 2025, what is certain is that the next four years will be nothing short of an interesting time for both the global economy and the markets.

With a more protectionist stance by both Trump as well as other Western leaders, Investors should pay close attention to the countries who are clear winners and losers as a result of such policies – particularly in the Industrial REITs sector.

As global trade tension rises, the trend of Friendshoring will only accelerate which could further impact the occupancy rate of China industrial properties as companies shift away from China to either their neighbouring countries (i.e. Vietnam/Malaysia) or back to their main region of operation.

I’ve written more extensively on the impact of Trump 2.0 in my 2025 market outlook which you can read about it here - 2025 Market Outlook: The Age Of Tariffs

Should the global economy slow down because of the impact of protectionist policies, the next sector that might experience a slowdown would be the hospitality sector as they may face a lower occupancy rate with lesser business and leisure travelers. This will ultimately affect the DPU of the hospitality REITs as they are very sensitive to the economic cycle given their reliance on the variable rental component.

Apart from these two sectors, I believe that the other sectors will remain relatively resilient in the face of Trump 2.0.

Conclusion: A Year To Accumulate

While some may say that the market is forward looking and that interest rates cuts are already priced in, from my experience, it is usually not the case.

What is more likely is that investors will be disappointed with the lack of DPU growth despite the interest rate cut narrative which may cause the share price of REITS to remain depressed for the year of 2025.

As such, 2025 will probably be the last year for investors to be able to accumulate REITs at a depressed levels before the sector experiences a more sustainable recovery driven by DPU growth moving into 2026 and 2027.

That said, nobody can time the market so please based you decision on valuations and factor into account the potential recovery in DPU coming 2026 onwards in your models.

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