Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

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Singapore REITs was the top net buy sector in 6M2019, drawing net institutional inflows of S$396.3 million over the period. In June, S-REITs was the top net buy sector, attracting inflows of S$223.1 million, with CapitaLand Commercial Trust topping the net buy list. 
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Of the 34 REITs listed on SGX, 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties located in Asia-Pacific, Europe and the US. These 10 office REITs have a market cap of more than S$30 billion. 
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	<li>Among the 10 commercial REITs, six own Singapore office assets. In Jan-June 2019, the three best performers among the six were: Mapletree Commercial Trust (+29.9%), CapitaLand Commercial Trust (+26.9%) and Frasers Commercial Trust (+26.0%). The trio averaged a YTD total return of 27.6%.</li>
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Singapore Exchange lists 34 REITs, seven stapled trusts and three property trusts with a combined market cap of over S$100 billion. Two stapled trusts – ARA US Hospitality Trust and Eagle Hospitality Trust – listed on SGX in May.

Singapore REITs was the top net buy sector in the first six months of 2019, drawing net institutional inflows of S$396.3 million over the period. S-REITs was the top net buy sector in June, after being May’s second top net buy sector. CapitaLand Commercial Trust topped the institutional net buy list in June, drawing inflows of S$58.6 million.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-07/Institutional%20Flows%20for%20S-REITs%20%28June%29.png" alt="Institutional Flows for S-REITs ">
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 <div class="content-caption">Institutional Flows for S-REITs </div>
Source: SGX data

Of the 34 REITs on SGX, 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties, located in Singapore, Malaysia, South Korea, Australia, Europe, and the United States. These 10 commercial/office REITs have a combined market cap of more than S$30 billion. Among them, Mapletree Commercial Trust and Suntec REIT also have retail assets in their portfolios.

Among them are six REITs with Singapore office assets: CapitaLand Commercial Trust, Mapletree Commercial Trust, Suntec REIT, Keppel REIT, Frasers Commercial Trust and OUE Commercial REIT. Over January-June 2019, the three best performers among the six were: Mapletree Commercial Trust (+29.9%), CapitaLand Commercial Trust (+26.9%) and Frasers Commercial Trust (+26.0%). The trio averaged a YTD total return of 27.6% and a 12-month dividend indicated yield of 4.7%.

The table below details the six REITs with Singapore office assets, sorted by YTD total return.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			12M Div Ind Yld (%)
			</td>
			<td>
			P/B (x)
			</td>
		</tr>
<tr>
<td>
			MAPLETREE COMMERCIAL TRUST*
			</td>
			<td>
			N2IU
			</td>
			<td>
			5,963
			</td>
			<td>
			29.9
			</td>
			<td>
			41.3
			</td>
			<td>
			66.3
			</td>
			<td>
			4.4
			</td>
			<td>
			1.1
			</td>
		</tr>
<tr>
<td>
			CAPITALAND COMMERCIAL TRUST
			</td>
			<td>
			C61U
			</td>
			<td>
			8,100
			</td>
			<td>
			26.9
			</td>
			<td>
			36.9
			</td>
			<td>
			79.3
			</td>
			<td>
			4.0
			</td>
			<td>
			1.0
			</td>
		</tr>
<tr>
<td>
			FRASERS COMMERCIAL TRUST
			</td>
			<td>
			ND8U
			</td>
			<td>
			1,522
			</td>
			<td>
			26.0
			</td>
			<td>
			30.3
			</td>
			<td>
			63.8
			</td>
			<td>
			5.8
			</td>
			<td>
			0.9
			</td>
		</tr>
<tr>
<td>
			KEPPEL REIT
			</td>
			<td>
			K71U
			</td>
			<td>
			4,287
			</td>
			<td>
			13.1
			</td>
			<td>
			20.1
			</td>
			<td>
			43.0
			</td>
			<td>
			4.3
			</td>
			<td>
			0.8
			</td>
		</tr>
<tr>
<td>
			OUE COMMERCIAL REIT
			</td>
			<td>
			TS0U
			</td>
			<td>
			1,461
			</td>
			<td>
			12.6
			</td>
			<td>
			-11.9
			</td>
			<td>
			5.1
			</td>
			<td>
			6.4
			</td>
			<td>
			0.6
			</td>
		</tr>
<tr>
<td>
			SUNTEC REIT
			</td>
			<td>
			T82U
			</td>
			<td>
			5,422
			</td>
			<td>
			12.4
			</td>
			<td>
			17.5
			</td>
			<td>
			33.3
			</td>
			<td>
			5.0
			</td>
			<td>
			0.9
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			20.2
			</td>
			<td>
			22.4
			</td>
			<td>
			48.5
			</td>
			<td>
			5.0
			</td>
			<td>
			0.9
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 28 June 2019) 
*Note: VivoCity mall accounts for 48% of the trust’s FY18/19 gross revenue

Office Rentals Seen Climbing Amidst Tapering Supply

According to a <a href="https://research.sginvestors.io/2019/05/office-reits-uob-kay-hian-research-2019-05-30.html">report</a> dated 30 May 2019 by UOB-Kay Hian Research, Singapore’s office market, which bottomed out in the first half of 2017, is now in its second year of recovery, and continued upside for office rentals will likely be supported by tapering supply.

Occupancy for Grade A office space within the core Central Business District has seen a V-shaped recovery, rebounding to a healthy 95.2% in 1Q 2019 from the trough of 91.6% in 3Q 2017, the report noted.

New supply for core CBD office space in the city-state is estimated at 5.33 million square feet between 2019 and 2022, representing an average of 1.36 million square feet per annum, 29% below the 10-year average of 1.91 million square feet, it added.

Likewise, in a 21 June 2019 <a href="https://www.colliers.com/en-gb/singapore/about/media/2019-06-21-top-micro-markets-sg">report</a>, Colliers International projected that rents for Grade A office buildings in Singapore’s CBD will rise by 8% this year and 5% in 2020.  It expects new supply in 2019-2021 to average 614,000 square feet per annum or 2% of stock, versus 5% over the past five years. This is anticipated to keep vacancies tight in 2019 through 2021, the report added.

It also noted that growth of the technology, media and telecoms (TMT) and flexible workspace sectors has accounted for most of the net absorption of office space in 2018 and the 2019 year-to-date.
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Singapore REITs was the top net buy sector in 6M2019, drawing net institutional inflows of S$396.3 million over the period. In June, S-REITs was the top net buy sector, attracting inflows of S$223.1 million, with CapitaLand Commercial Trust topping the net buy list. 
	 
	
Of the 34 REITs listed on SGX, 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties located in Asia-Pacific, Europe and the US. These 10 office REITs have a market cap of more than S$30 billion. 
	 
	Among the 10 commercial REITs, six own Singapore office assets. In Jan-June 2019, the three best performers among the six were: Mapletree Commercial Trust (+29.9%), CapitaLand Commercial Trust (+26.9%) and Frasers Commercial Trust (+26.0%). The trio averaged a YTD total return of 27.6%.

Singapore Exchange lists 34 REITs, seven stapled trusts and three property trusts with a combined market cap of over S$100 billion. Two stapled trusts – ARA US Hospitality Trust and Eagle Hospitality Trust – listed on SGX in May.

Singapore REITs was the top net buy sector in the first six months of 2019, drawing net institutional inflows of S$396.3 million over the period. S-REITs was the top net buy sector in June, after being May’s second top net buy sector. CapitaLand Commercial Trust topped the institutional net buy list in June, drawing inflows of S$58.6 million.

      
    
    Institutional Flows for S-REITs 
Source: SGX data

Of the 34 REITs on SGX, 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties, located in Singapore, Malaysia, South Korea, Australia, Europe, and the United States. These 10 commercial/office REITs have a combined market cap of more than S$30 billion. Among them, Mapletree Commercial Trust and Suntec REIT also have retail assets in their portfolios.

Among them are six REITs with Singapore office assets: CapitaLand Commercial Trust, Mapletree Commercial Trust, Suntec REIT, Keppel REIT, Frasers Commercial Trust and OUE Commercial REIT. Over January-June 2019, the three best performers among the six were: Mapletree Commercial Trust (+29.9%), CapitaLand Commercial Trust (+26.9%) and Frasers Commercial Trust (+26.0%). The trio averaged a YTD total return of 27.6% and a 12-month dividend indicated yield of 4.7%.

The table below details the six REITs with Singapore office assets, sorted by YTD total return.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			12M Div Ind Yld (%)
			
			
			P/B (x)
			
		


			MAPLETREE COMMERCIAL TRUST*
			
			
			N2IU
			
			
			5,963
			
			
			29.9
			
			
			41.3
			
			
			66.3
			
			
			4.4
			
			
			1.1
			
		


			CAPITALAND COMMERCIAL TRUST
			
			
			C61U
			
			
			8,100
			
			
			26.9
			
			
			36.9
			
			
			79.3
			
			
			4.0
			
			
			1.0
			
		


			FRASERS COMMERCIAL TRUST
			
			
			ND8U
			
			
			1,522
			
			
			26.0
			
			
			30.3
			
			
			63.8
			
			
			5.8
			
			
			0.9
			
		


			KEPPEL REIT
			
			
			K71U
			
			
			4,287
			
			
			13.1
			
			
			20.1
			
			
			43.0
			
			
			4.3
			
			
			0.8
			
		


			OUE COMMERCIAL REIT
			
			
			TS0U
			
			
			1,461
			
			
			12.6
			
			
			-11.9
			
			
			5.1
			
			
			6.4
			
			
			0.6
			
		


			SUNTEC REIT
			
			
			T82U
			
			
			5,422
			
			
			12.4
			
			
			17.5
			
			
			33.3
			
			
			5.0
			
			
			0.9
			
		


			Average
			
			
			 
			
			
			 
			
			
			20.2
			
			
			22.4
			
			
			48.5
			
			
			5.0
			
			
			0.9
			
		

Source: Bloomberg &amp; StockFacts (data as of 28 June 2019) 
*Note: VivoCity mall accounts for 48% of the trust’s FY18/19 gross revenue

Office Rentals Seen Climbing Amidst Tapering Supply

According to a report dated 30 May 2019 by UOB-Kay Hian Research, Singapore’s office market, which bottomed out in the first half of 2017, is now in its second year of recovery, and continued upside for office rentals will likely be supported by tapering supply.

Occupancy for Grade A office space within the core Central Business District has seen a V-shaped recovery, rebounding to a healthy 95.2% in 1Q 2019 from the trough of 91.6% in 3Q 2017, the report noted.

New supply for core CBD office space in the city-state is estimated at 5.33 million square feet between 2019 and 2022, representing an average of 1.36 million square feet per annum, 29% below the 10-year average of 1.91 million square feet, it added.

Likewise, in a 21 June 2019 report, Colliers International projected that rents for Grade A office buildings in Singapore’s CBD will rise by 8% this year and 5% in 2020.  It expects new supply in 2019-2021 to average 614,000 square feet per annum or 2% of stock, versus 5% over the past five years. This is anticipated to keep vacancies tight in 2019 through 2021, the report added.

It also noted that growth of the technology, media and telecoms (TMT) and flexible workspace sectors has accounted for most of the net absorption of office space in 2018 and the 2019 year-to-date.



Mapletree Pan Asia Commercial Trust (MCT SP)

Three Best-Performing Singapore Office REITs Returned 28% in YTD