Best REITs for 2025: Investing in Real Estate Investment Trusts in Singapore

Real Estate Investment Trusts (REITs) allow investors to invest in real estate without high capital outlay. These trusts pool money from investors to purchase and manage income-generating properties, distributing the rental income as dividends. Different REITs hold portfolios of properties serving diverse uses, allowing you to zero in on a particular sector like hospitality, commercial, or mix-and-match to hedge against risks. Thus, REITs are a popular choice for diversifying your portfolio.

S-REITs, or Singapore Real Estate Investment Trusts, refer to REITs listed on the Singapore Exchange (SGX). As of August 2024, Singapore has the largest REIT market in Asia (excluding Japan), with 40 traded S-REITs and property trusts collectively valued at approximately S$100 billion. All told, S-REITs have enjoyed good popularity among investors. Today, they make up over 12% of the SGX's total market capitalisation.

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REITs operate by pooling funds from multiple investors through an Initial Public Offering (IPO), where units of the REIT are offered to the public. This collective capital is then used to acquire and manage a portfolio of income-generating properties and leased out to tenants.

The revenue generated through rental income from these properties is then distributed back to the investors in the form of dividends quarterly and semi-annually. This setup offers an opportunity for individuals to tap into the real estate market and generate passive income without the burdens of direct property ownership or management.

Singapore takes a strict approach to regulating REITs, ensuring they remain stable and investor-friendly. This rigorous oversight gives investors peace of mind knowing their investments are protected. Some key regulations S-REITs must adhere to include:

• Generous dividend payouts: S-REITs are required to distribute at least 90% of their taxable income to shareholders annually, providing a steady stream of income for investors.

• Controlled debt levels: To prevent excessive risk-taking and help ensure financial stability, S-REITs must maintain a gearing ratio (debt-to-asset ratio) of less than 50%.

• Limits on development: Investment in property development is restricted to a maximum of 25% of the REIT's total asset value. This safeguards against overexposure to development risks.

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The potential returns from REITs can vary based on several factors, including the type of properties held within the REIT's portfolio, the overall market conditions, and the efficiency of the REIT's management.

For example, REITs focused on high-demand sectors like data centres or logistics might experience stronger growth compared to those invested in more traditional sectors like retail or office spaces. Similarly, favourable economic conditions can lead to higher rental yields and property appreciation, boosting the overall returns for REIT investors.

Historical performance data can provide some insight into the potential returns from REITs. 
In Singapore, S-REITs have demonstrated a compound annual growth rate of around 6% in market capitalisation over the past 10 years. This suggests that, while past performance is not indicative of future results, REITs can offer a steady and potentially lucrative investment opportunity. It continues to attract investors due to their long-term potential, geographical diversification, and sectoral variety.

2025 is shaping up to be a promising year for S-REITs. With the market anticipating three rate cuts by the US Federal Reserve, S-REITs could see significant tailwinds. If interest rates in Singapore remain unchanged, borrowing costs are expected to fall, especially benefiting REITs with a higher proportion of floating-rate debt.

Here are four S-REITs that stand out as potential candidates for your portfolio:

Keppel DC REIT is a standout in the data centre industry, managing a portfolio of state-of-the-art facilities that power the digital economy. From cloud computing to AI-driven technologies, the REIT supports some of the most in-demand digital services today. After navigating a challenging 2023, it has bounced back stronger in 2024, making it a top pick for investors in Singapore.

Keppel DC REIT saw higher revenues in 2024 thanks to strong rental increases across its properties, contributions from its recently acquired Tokyo DC 1, strong reversions and escalations, and the positive resolution from the Keppel DC Singapore 1 Ltd. 1 and DXC Technology Services Singapore Pte. Ltd. dispute.

What's even more exciting is its recent acquisition of two hyperscale data centres in Singapore — Keppel DC Singapore 7 and 8 — for S$1.38 billion. This deal is one of Southeast Asia's largest and boosts Keppel DC REIT's portfolio to 25 data centres, increasing its total asset value by 36% to S$5.2 billion. These new facilities are already fully leased to major tech companies and are specifically designed to handle AI-driven workloads, ensuring a stable and diversified income stream.

Here's the best part: this acquisition is expected to grow income available for distribution by 8.1%, meaning investors could see more immediate benefits.

Frasers Centrepoint Trust (FCT) is a leading player in Singapore's suburban retail sector, managing a portfolio of well-loved shopping malls that cater to the everyday needs of local communities. Its malls, located in high-traffic residential areas of Singapore, are known for their strong tenant mix and steady shopper footfall, making FCT a reliable performer in the retail REIT space.

2024 was a transformative year for FCT. In March, it increased its stake in NEX mall to 50%, bolstering its position in Singapore's retail landscape. The trust also completed a major upgrade at Tampines 1 in August, exceeding expectations with a return on investment above 8%. Adding to its achievements, FCT became a constituent of the Straits Times Index (STI) in March 2024, highlighting its growing importance in Singapore's stock market.

As for the first quarter of 2025, Frasers Centrepoint Trust revealed a 99.5% for its retail portfolio, and plans to kick off an asset enhancement initiative (AEI) at Hougang Mall this year to continue its focus on upgrading and optimising its assets.

With its strong market presence, strategic growth initiatives, and focus on suburban retail — a resilient sector in Singapore—FCT is well-positioned to deliver stable growth and steady returns for its unitholders.

A long-time favourite among Singaporean investors, Mapletree Industrial Trust’s portfolio consists mainly of industrial assets located in Singapore. It has a well-diversified set of holdings, ranging from business parks, hi-tech industrial buildings and ramp-up buildings to flatted factories and a growing emphasis on data centres.

In 2024, MIT saw its average overall portfolio occupancy rise to 92.9%, up from 91.9% in the previous quarter. This improvement was driven by the full-quarter contribution of Vanderbilt University Medical Center’s lease commencement at 402 Franklin Road, Brentwood. MIT also recorded a weighted average rental revision rate of 10.7% across its Singapore properties, reflecting its ability to negotiate higher rental rates and maintain strong tenant demand.

Over recent years, MIT has strategically pivoted towards data centres, which now make up 50% of its portfolio. This focus, coupled with its high-specification properties catering to sectors like IT, media, tech, bio-medical and varied industrial sectors, means that the fund now stands as one of Singapore’s largest new economy REITs, with total asset-under-management close to S$9 billion.

Capitaland Ascendas REIT (CLAR) holds the distinction of being Singapore’s first and largest business and industrial REIT. Specialising in tech and logistics properties in developed markets, the fund owns properties across Business Space and Life Sciences, Logistics, and Industrial and Data Centres in Singapore, Australia, the United States and the United Kingdom/Europe.

In 2023, a major highlight was the proposed redevelopment of a data centre in the United Kingdom, set to triple its capacity to 60 megawatts. This enhancement positions the property to attract hyperscale tenants, a critical move to cater to the growing demand for robust digital infrastructure.

Building on this momentum, CLAR has launched three ongoing redevelopment projects in Singapore valued at S$543.6 million. These include two Business Space and Life Sciences properties and one Logistics property. These projects are part of the fund’s broader strategy to optimise returns and unlock value from its portfolio.

Despite a slight increase in gearing from 37.2% to 37.9%, the REIT remains financially healthy in 2024, with 79.1% of its debt hedged for an average term of 3.5 years.

CapitaLand Integrated Commercial Trust (CICT) stands as a giant in Singapore's REIT landscape. As the largest REIT listed on the Singapore Exchange, it boasts a market capitalisation of S$14.1 billion as of 31 December 2024. CICT offers investors a way to gain exposure to prime commercial real estate in Singapore and beyond.

CICT's portfolio is a testament to its prominence. With 21 properties in Singapore, 2 in Frankfurt, Germany, and 3 in Sydney, Australia, the total property value under its management reaches a staggering S$26 billion.

On top of that, CICT is set to further solidify its position with the acquisition of a 50% stake in the iconic ION Orchard mall. This strategic move, valued at S$1.85 million, is expected to boost CICT's portfolio and reinforce its standing as the largest owner of private retail space in Singapore. This acquisition not only adds a premium asset to CICT's holdings but also enhances its diversification and resilience, making it an even more attractive option for investors seeking exposure to Singapore's dynamic commercial real estate market.

Managed by CapitaLand Integrated Commercial Trust Management Limited, a subsidiary of the leading global real estate giant CapitaLand Investment Limited, CICT benefits from strong expertise and a global network. This ensures that the REIT is well-positioned to navigate market dynamics and deliver long-term value to investors.

REIT Exchange-Traded Funds provide a convenient gateway to a diversified collection of REITs. This makes them a great choice for investors seeking broader market exposure and a simplified investment strategy.

The top-performing REIT ETFs available to Singapore investors include:

Retail REITs focus on shopping malls and retail spaces. These REITs, like Frasers Centrepoint Trust and CapitaLand Integrated Commercial Trust, generate income primarily from rental leases with retail tenants.

Office REITs focus on acquiring and managing office buildings, and generating revenue through lease agreements with businesses. The performance of this type of REIT is intrinsically linked to the overall economy and the demand for the office market. In Singapore, Keppel DC REIT and Mapletree Commercial Trust are well-established players in this space.

Industrial REITs hold properties like warehouses, logistics facilities, and factories. And the increasing demand for e-commerce and supply chains has contributed to the growth and performance of industrial REITs such as Mapletree Industrial Trust and CapitaLand Ascendas REIT.

Hospitality REITs invest in hotels, resorts, and other hospitality-related properties. Their performance is closely tied to tourism and travel trends. CDL Hospitality Trusts and Far East Hospitality Trust are some examples of this type of REIT.

Healthcare REITs, including Parkway Life REIT and First REIT, focus on healthcare facilities like hospitals, clinics, and nursing homes. The ageing population and increasing healthcare needs have made this sector attractive to investors.

Mixed-use REITs hold a combination of different property types, offering diversification within their portfolio. This can provide a balance of income streams and potentially mitigate risk. Some key players for this REIT are CapitaLand Integrated Commercial Trust and Frasers Logistics & Commercial Trust.

Investing in REITs, particularly S-REITs, comes with its own set of advantages and disadvantages. As such, it's essential to approach them with a balanced perspective before making investment decisions.

• Stable income streams: S-REITs are required to distribute at least 90% of their income as dividends, making them a reliable source of regular payouts and consistently give out some of the highest dividend yields in the stock market. Moreover,  the most dependable S-REITs have a proven track record of delivering attractive and growing dividends over the years, providing investors with a stable source of passive income.

• Portfolio diversification: S-REITs offer individual investors accessibility to commercial real estate without the need for substantial capital to purchase a portfolio of properties. They also provide exposure to commercial real estate for those who lack the time or expertise to manage a real estate portfolio themselves, reducing the impact of sector-specific risks.

• Liquidity: Traded on the Singapore Exchange, S-REITs offer flexibility and ease of buying or selling compared to physical real estate.

• Growth potential: Well-managed S-REITs often pursue acquisitions or redevelopment projects that drive long-term value. These strategic initiatives can enhance the REIT's portfolio, increase rental income, and ultimately deliver higher returns for investors.

• Risks: S-REITs are not without risks. Rising interest rates, for instance, can increase borrowing costs, which may reduce distributable income. Property market downturns or tenant defaults can also impact rental income and portfolio valuations. Additionally, investors should be aware of sector-specific vulnerabilities, such as the effects of e-commerce on retail properties.

• Tax implications: While REITs themselves are not taxed, investors might need to pay taxes on the dividend income received. This can impact your overall investment returns, so it's crucial to factor in potential tax liabilities when evaluating REITs.

• Debt reliance: S-REITs often carry significant debt loads to finance their property acquisitions. Although this leverage can amplify returns, it also exposes investors to higher risk, especially during economic downturns or rising interest rate environments. In Singapore, the regulatory limit on gearing helps mitigate this risk, but it's still a factor to consider.

• Interest rate sensitivity: S-REITs can be particularly vulnerable to changes in interest rates. When interest rates rise, their borrowing costs increase, potentially squeezing profit margins and reducing the funds available for distribution as dividends.

Getting started with S-REITs is simpler than you might think. Here's a quick guide to help you take the first step:

1. Set your investment goals: Are you aiming for steady income, capital growth, or a balance of both? Your goals will shape the type of S-REITs you choose to buy.

2. Open a brokerage account: Sign up with a trusted online brokerage that offers access to the Singapore Exchange (SGX). Look for platforms with competitive fees and easy-to-use interfaces.

3. Research S-REITs: Take the time to compare options by looking at dividend yield, sector focus, and portfolio performance to find the best REITs that fit your strategy.

4. Start investing: Once ready, place your orders and begin building your portfolio of S-REITs.

To make the most of your S-REIT investments, consider optimising your strategy with a few key tactics. Since S-REITs offer attractive dividend yields, holding them in a tax-advantaged account can boost your after-tax returns. Look into the options available in Singapore, like SRS, to minimise your tax burden and keep more of your hard-earned gains. And for securing a steady stream of income during your golden years, leverage the benefits of CPF LIFE, Singapore's national annuity scheme.

If you prefer a more passive approach or aim for broader diversification, buying an ETF or mutual fund is another way. As explained above, these exchange-traded funds provide instant diversification across a range of REITs, offering a convenient entry point into the S-REIT market without extensive research.

When buying S-REITs, diversification is a practical way to manage risks and ensure your portfolio can withstand market fluctuations. By considering a mix of sectors, geographies, and allocation strategies, you can achieve a balance that supports both stability and growth.

S-REITs span various sectors, such as retail, industrial, hospitality, healthcare, and data centres. Each sector reacts differently to economic changes. For instance, industrial REITs often benefit from global trade and e-commerce, while retail REITs tend to perform well in periods of strong consumer spending. Diversifying across these sectors reduces over-reliance on any single market and can create a more resilient portfolio.

While many S-REITs are rooted in Singapore, several own properties in Australia, the US, Europe, and beyond. Geographical diversification spreads risk across different economies and shields your portfolio from local market downturns. At the same time, it gives you access to growth opportunities in overseas markets.

Balancing your portfolio means combining high-growth REITs with those offering steady income. For example, data centre REITs, known for their growth potential, pair well with retail or healthcare REITs, which deliver more consistent payouts. This mix helps ensure your portfolio is positioned to generate both income and capital appreciation.

When evaluating REITs, several key metrics can help you assess their financial health and potential for returns. Consider these important factors:

What makes REITs attractive is their regular dividend payouts, which income-seeking investors can use to build a stream of passive income. Those unfamiliar might be tempted to go for the REIT that provides the highest dividend yield but may not always be the wisest move. 

To see why, let’s first understand how dividend yield is derived — by taking the total dividends for the year and dividing it by the unit price, then multiplying by a hundred. 

Because of this formula, it means that the dividend yield can be raised if the unit price goes down (this is not desirable, as it poses a capital loss). 

Another way to derive a high dividend yield is to increase the amount paid out to investors. Given that REITs are already required to pay out 90% of their income as dividends, any increase in yield over this might result in insufficient funds retained for future investment and development. Again, this is not desirable. 

Instead, investors should pay attention to Distribution-per-Unit (DPU) — the actual amount paid out per share. What you want is a track record of increasing DPU year after year; this is a hallmark of a healthy, well-performing REIT.

Net Property Income is a measure of profitability. It is derived from the gross revenue (sum of all rentals collected from tenants), less expenses such as management fees, maintenance fees, property taxes, and other operating expenses.

As with DPU, you’ll want to look for a pattern of NPI growth — or at least this figure should be holding steady and not declining. A declining NPI means that the REIT isn’t properly generating profit, which is a sign of fundamental problems.

As a bonus, an increasing NPI also means higher DPU, so both figures often move in tandem.

Gearing, also known as aggregate leverage, measures how much debt the REIT has taken on.

Too much debt means high debt repayments, which can reduce profitability. Too low debt may not be desirable too, as it may mean the REIT is missing out on potential opportunities by not borrowing to acquire other properties.

In Singapore, REITs are allowed a maximum gearing of 50%. Most S-REITs strive to maintain healthy levels of gearing at around the 30% mark, but this may change under special circumstances.

The Net Asset Value is the net market value of the REIT, less liabilities. It is then divided by the total number of units to derive a per-share NAV.

Per-share NAV is useful when compared with the REIT’s unit price. If the share price is higher than the per-share NAV, it indicates the REIT is currently overvalued.

If the share price is on par, or lower than, the per-share NAV, it indicates the REIT is trading at or under fair value, which might indicate a buying opportunity.

Of course, this doesn’t mean that you should ignore an S-REIT just because its per-share NAV is lower than the unit price. There could be many other attractive factors that render high valuation worthy in the eyes of investors.

REITs are akin to dividend stocks in that they provide value to investors in two ways — unit price appreciation and dividend yield.

When evaluating the performance of a REIT, it is important to take both price and yield into account. The metric that encompasses both is known as the “total returns” and is a good metric to refer to if you want a quick, holistic overview of investment performance — compared to just the DPU or the NAV.