S-REITs Full Year Recap | How Rate Easing and Operational Strength Redefined S-REITs in 2025?

Looking back at the end of 2025, this year stands out as a "bumper year" for Singapore Real Estate Investment Trusts (S-REITs). Fueled by robust operational fundamentals and a favorable shift in interest rates, the sector staged a powerful rally, marking its strongest annual performance since 2019.

Data from the SGX as of mid-December reveals that the iEdge S-REIT Index surged 9.3% in price, delivering a staggering 14.7% total return when dividends are included. This performance stands in sharp contrast to recent years, nearly approaching the benchmark set in 2019 when the index hit a 27.5% total return. The breadth of this year's gain is particularly noteworthy, with 29 out of 33 index constituents posting positive total returns, and the top 10 performers all delivering gains exceeding 20%.

Who Led the 2025 Rally? To highlight the standout performers in this historic year, I had compiled a performance summary of the top 10 gainers within the iEdge S-REIT Index ranking by YTD %Chg. Beyond the impressive numbers, the leaderboard offers a snapshot of how different themes in the Singapore property market played out over 2025.

At the very top of the table, $Acro HTrust USD(XZL.SI)$   surged 34.58% in price while offering a 6.27% dividend yield. As a hospitality-focused vehicle, its outperformance underscores how the full reopening of borders and the recovery in global tourism have translated into higher room rates, stronger occupancy, and a renewed appetite for hotel-related assets. Investors rewarded the trust for its leverage to travel demand, but also for its ability to convert the tourism upswing into rising distributions.

Close behind, $OUEREIT(TS0U.SI)$   delivered a 33.75% capital gain with a 5.92% yield, reflecting a successful blend of office, retail and hospitality exposure. Its strong showing suggests that investors are increasingly confident in integrated, mixed-use portfolios that capture multiple income streams from central business district offices, shopping malls and hotels. The improvement in its finance costs and active capital management also played a role in re-rating the units higher.

Blue-chip commercial names dominate the next tier. $CapLand IntCom T(C38U.SI)$   secured third place with a 26.64% rise and a 4.68% yield, highlighting the resilience of prime office and retail assets in Singapore's core business districts. $Mapletree PanAsia Com Tr(N2IU.SI)$  , up 25.70% with a 5.49% yield, showcases the appeal of geographically diversified portfolios that balance Singapore exposure with assets 

Further down the leaderboard, $Suntec Reit (T82U.SG)$ (+25.31%) and $Keppel Reit (K71U.SG)$ (+20.66%) reinforce the view that quality office and mixed‑use assets are back in favour as vacancy rates ease and Grade A rents edge higher. $Frasers L&C Tr (BUOU.SG)$ (+19.76%) reflects structural demand for logistics and modern commercial facilities, supported by e‑commerce, supply‑chain diversification and the digital economy. Even the more defensive names, such as $First Reit (AW9U.SG)$ and $Frasers Cpt Tr (J69U.SG)$, delivered respectable gains of around 14–15%, with First REIT standing out for its attractive 8.52% yield, appealing to income‑oriented investors.

The "Top 10" leaderboard for 2025 illustrates a multifaceted recovery rather than the dominance of a single niche, suggesting that investor confidence returned not just to pure hospitality plays, but also to high-quality "blue-chip" assets that offer stability, scale, and exposure to Singapore's core commercial growth.

Key Drivers of 2025's Performance

The resurgence in 2025 was not the result of a single event, but rather a convergence of shifting macroeconomic expectations and solid internal management. 

Jonathan Koh, an analyst at UOB Kay Hian, suggests that the industry benefited significantly from an improving rate environment. The US Federal Reserve has already cut policy rates several times, helping lower funding costs across global credit markets. Falling domestic benchmark rates in Singapore have directly translated into cheaper borrowing for S‑REITs, easing balance‑sheet pressure and supporting higher valuations for income‑producing assets.

At the same time, operating fundamentals across major REIT sub‑sectors have remained resilient. Retail, industrial and office portfolios generally reported stable occupancy and positive rental reversions in recent quarters, indicating that underlying tenant demand is healthy rather than cyclical or one‑off. This combination of lower financing costs and solid property cash flows has given investors confidence that distributions are sustainable, enabling the sector to deliver its best total‑return performance since 2019.

From a thematic perspective:

– Hospitality has been driven by the full recovery of international tourism, lifting Revenue Per Available Room (RevPAR) and boosting the earnings of hotel‑focused trusts.

– Industrial and data‑centre REITs have benefited from structural tailwinds in digitalization and e‑commerce, maintaining high occupancy and positive rental reversions.

– Retail and commercial assets have been supported by steady local consumption and “flight‑to‑quality” trends, which have underpinned Grade A office rents and the resilience of prime shopping destinations.

Outlook and risks for 2026

Looking ahead to 2026, the consensus view is cautiously optimistic. Further policy‑rate reductions in the US and a continued decline in local funding benchmarks would likely lower borrowing costs even more, supporting distributable income and narrowing yield spreads versus risk‑free assets. Analysts particularly favour S-REITs with strong balance sheets and the ability to grow distributions through active portfolio management—such as asset enhancements, selective acquisitions and positive rental reversions in structurally growing segments like logistics and data centres.

Nonetheless, investors must remain mindful of key risks. A sharper‑than‑expected global economic slowdown could weaken tenant demand and pressure rents or occupancy, especially in more cyclical retail and office segments. Geopolitical tensions and trade frictions could also weigh on business confidence and cross‑border capital flows. Given these uncertainties, the expectation is that S‑REITs may gradually close the performance gap with the broader market but are unlikely to lead any sharp decline should a correction occur, thanks to their relatively stable income profiles and long lease tenures.

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