INTRODUCTION
1. Mr Christopher Lee, CEO of Shareinvestor,
Ms Nupur Joshi, CEO of REITAS,
Ladies and gentlemen,
A very good morning to you all.
2.Thank you to Shareinvestor and REITAS for inviting me today, and congratulations for putting together another successful event for the fifth year running.
THE SINGAPORE REITS’ JOURNEY
3. I hope today’s full house indicates that Singapore-listed REITs – or S-REITs – have become a staple in one’s investment portfolio, alongside blue-chip stocks.
4. The REITs sector has indeed come a long way since the listing of the first REIT on SGX in 2002. The success of this sector was due to a combination of factors, including Singapore being an early mover in this space, and our government putting in place an effective regulatory and tax framework.
5. Our REITs journey started humbly, with the support of homegrown real estate developers and companies who recognised the potential of this sector. The initial years were mainly driven by Singapore sponsors who sought to unlock the value of their Singapore assets.
6. Over time, as Singapore sponsors grew, the range of assets also increased to include overseas properties across diversified industries. By 2013, we had entrenched ourselves as a true Asian hub with over 35 REITs and property trusts.
7. 2014 marked the start of a trend of overseas sponsors listing domestic assets. As investors became more sophisticated, so did their appetite for income-producing overseas real estate assets. Since then, nearly all the REITs and property trust listings hold purely overseas assets, signaling the emergence of Singapore as a global REITs hub.
8. We are now seeing the globalisation of Asian sponsors, together with the participation of overseas sponsors, driving the growth of Singapore as a global REIT hub.
9. Over the past 10 years[1], the market capitalisation of this sector has grown at a compounded annual growth rate of 22%. Today, we have 43 REITs and property trusts with a combined market capitalisation of close to S$100 billion – the largest REITs and property trusts market in Asia ex-Japan.
10. More significantly, 80% of our REITs and property trusts hold assets outside of Singapore, making SGX the most international REITs platform. Investors can now gain exposure to international assets across Asia, US and Europe, as well as diversified sectors from hospitality to logistics. For pure-play US and European REITs, investors can also use the REITs as a proxy for investing in US or Euro assets in the local currencies.
REAPING THE REWARDS OF REITS
11. I trust that many of you here have reaped the rewards of investing in S-REITs. S-REITs have delivered an attractive average dividend yield of 6.4%[2], offering the highest yields compared to other asset classes. In fact, the FTSE ST REIT Index generated 10-year[3] annualised total returns of 16.1%, almost double the 9.3% total returns of the Straits Times Index in the same period. For the first four months of this year, our S-REIT sector generated total returns of about 13%.
12. The demand for REITs has also extended to REIT products. As the sector matures, coupled with the interest in passive investments, we now have three REIT-linked exchange-traded funds (ETFs) listed on SGX.
13. In the current interest rate environment, we believe the REIT sector will continue to be resilient and remain an attractive, liquid investment choice. S-REITs are not just a retail play, and have started to catch the attention of institutional investors such as family offices and fund managers.
THE NEXT WAVE OF GROWTH
14. So where do we see the REITs sector heading?
15. We are working to develop a broader and deeper REITs and property trusts market. By this, we mean more pure-play US and Europe REITs, as well as new resilient sectors such as self-storage, specialised anchored retail assets and multi-family homes.
16. With this, SGX will do its part in increasing investor education on overseas property markets and specific sector knowledge. Through our corporate access events, we are engaging more institutional investors and identifying new sources of capital such as pension and insurance funds. On the research front, we are also expanding our REITs-related content and partnering with institutional and independent research platforms to widen our distribution channels.
IN CONCLUSION
17. We are on the road to becoming a global REIT hub, and we look forward to the support of everyone here today – from sponsors and REIT managers, to research analysts and investors – to help drive the next wave of growth.
18. While it is heartening to see so many people having a keen interest in REITs, as the CEO of SGX, I must also remind you that SGX offers many more investment options including a wide selection of stocks outside of index stocks, bonds, ETFs, structured warrants and daily leveraged certificates.
19. I would like to close with a timeless piece of advice – don’t put all your eggs in one basket. The best investment that you can make is in yourself and your financial education – learn the risks and rewards of your investments, and invest wisely for the long term.
20. On this note, I wish you all a fruitful event and every success in your investment journey.
[1] From 2008 to 2018
[2] As at end of April 2019. Excludes ARA Hospitality Trust which listed in May 2019.
[3] From 2008 to 2018