What are REITs?
REITs are collective investment schemes that invest in a portfolio of income generating real estate assets. The assets of REITs are professionally managed and rental income generated from assets are distributed back to unit holders. In Singapore, REITs distribute a minimum of 90% of the income as dividend back to unit holders in order to enjoy tax concession. REITs can serve as an alternative to investing in physical properties as it is an income generating asset class.
Singapore REITs entered into the 16th year since the first listing of Capitaland Mall Trust on SGX in July 2002. Singapore-listed REITs offer investors access to a diversity of real estate assets including retail malls, office buildings, industrial properties, hotels, serviced apartments and hospitals. Units of listed REITs are listed on the Singapore Exchange (SGX) and are bought and sold like other listed securities. There are currently 40 REITs listed in Singapore Stock Exchange.
Why Invest in Singapore REITs?
The main benefit of investing in Singapore REITs is that they can provide a high dividend yield, between 5-9%. There are not many other investment alternatives that can generate this much return in the current market condition. Compared to other income assets in Singapore, the overall average dividend yield of Singapore REITs sector is about 6.76%, which is much higher than bank saving, 10 Years Singapore government bond yield and even Singapore’s Straits Time Index (STI) ETF dividend yield.