The Business Times Is Bullish On Retail REITs. So Am I.

A recent Business Times article painted a rather bullish picture for Singapore’s retail REITs, especially Frasers Centrepoint Trust (FCT) and CapitaLand Integrated Commercial Trust (CICT).

I know, it is paywalled, but Singaporeans can actually read for free!

Guess what? It just so happens that I already hold both of them in my portfolio as exposure to the resilient, suburban retail sector in our beloved red dot.

Like the analysts, I remain positive about these two REITs despite challenges in the retail sector.

Both FCT’s portfolio occupancy and CICT’s (retail) portfolio are sitting at close to 100%

Despite the economic backdrop of inflation and uncertainty, shop space is getting filled up by eager tenants even as big names retailers are exiting.

I suppose even when wallets are a bit tighter, suburban malls are still where people gather for a little retail (or service) therapy and a bite to eat.

Retail rents across Singapore continue to rise

Despite some brands deciding that Singapore wasn’t quite their cup of kopi, FCT and CICT reported positive rental reversions, and they continue to expect mid to high single-digit rental reversions in 2025.

Regardless of budget, people still need groceries, healthcare, and everyday essentials – the kind of services that suburban malls specialize in.

Acquisitions to strengthen market position

This is happening even as other REITs may be struggling to stay afloat.

Coincidentally, both FCT and CICT are actively expanding and securing prime retail locations.

FCT is planning to acquire the South Wing of Northpoint City, whereas CICT has already acquired a 50% stake in Ion Orchard.

High-traffic, high-value retail hubs – agree?

Are Retail S-REITs’ Yields Attractive?

Frasers Centrepoint Trust and CapitaLand Integrated Commercial Trust are currently giving out a distribution yield of around 5.5% at the moment.

In comparison, risk-free Singapore Savings Bonds (the latest edition) are giving an average return of 2.69% per year.

For an investment that I believe will increase in value in the short to mid-term, coupled with an extra 2.8% in yield versus risk-free SSBs, that’s something I have the appetite for.

Like I wrote in an earlier article, SORA has declined significantly from its peak. To me, this is more important to pay attention to than short-term price actions.

Can you image that 9 years ago (that’s 2016), Bloomberg sounded as if malls in Singapore were going to death-spiral into oblivion?

It’s still hilarious when I look back at it from time to time, because these people writing at their desks had no idea what reality in Singapore looks like.

Kevin started Turtle Investor when his net worth languished at negative $25,755. His desire to turn things around led him to build passive income from investments and side hustles that pay for his daily expenses and vacations. You can learn more about Kevin here.