Thursday, November 12, 2020

Real Estate Sector Market Update in Singapore (September 2020)

 

By: Adrian Cheow, Executive Director & Practice Leader, Deal Advisory, FCCA
Angeline Chin, Senior Manager, Deal Advisory, CA Singapore
Jeremy Choo, Consultant, Deal Advisory

 

The COVID-19 pandemic has undoubtedly negatively affected the real estate sector in Singapore. Singapore’s iEdge SG Real Estate Index has decreased by 12.8% over the last 12 months. This downwards trend was similarly observed for the MSCI International All country Asia ex Japan Real Estate Price Index and MSCI International World Real Estate Price Index which decreased by 11.9% and 13.8% respectively in the last 12 months. There has however been a cautious and gradual recovery of the Singapore’s iEdge SG Real Estate Index from the months of May 2020 which coincides with Singapore’s Phase 2 of reopening in June 2020.

This was driven notably by the following real estate investment trusts (“REITs”):

Health Care REITs

• Parkway Life Real Estate Investment Trust which has a portfolio of hospitals, healthcare facilities and real estate assets used for healthcare research, manufacturing or storage of drugs, medicine and devices across Singapore, Malaysia and Japan.

Industrial REITs

• Soilbuild Business Space REIT, holds 2 business park properties and 10 industrial properties located across industrial clusters in Singapore;
• Mapletree Industrial Trust with a portfolio of 87 properties in Singapore and 27 properties in North America. Its portfolio includes data centres, hi-tech buildings, business park buildings, flatted factories, stack-up/ramp-up buildings and light industrial building;
• Frasers Logistics & Commercial Trust, holds approximately 99 industrial and commercial properties across Australia, Germany, Singapore, United Kingdom and the Netherlands; and
• ARA LOGOS Logistics Trust which has a portfolio of approximately 27 logistics warehouse properties strategically located in logistics clusters in Singapore and Australia.

Specialised REITs

• Keppel DC REIT, has a diversified portfolio of income-producing real estate assets used primarily for data centre purposes. Chinese tech giants such as Tencent, ByteDance and Alibaba have been increasing their regional presence by expanding operations in Singapore. With this, there has been a demand for data centres which are being driven by big data, 5G and cloud adoption technologies.

In this article, we aim to set out:

1. Real estate sector market update focusing on real estate investment trusts (“REITs”) in Singapore identifying the drivers behind the change in market equity value and their key trading multiples;
2. Real estate sector market update in Singapore with a focus on sizeable real estate companies identifying the drivers behind the change in market equity value and their key trading multiples;
3. Real estate market indices trend in Asia for the last 3 years; and
4. Real estate M&A activities trend for the last 3 years and completed deals in South East Asia from January to September 2020.

 

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