S‑Reits, as measured by the iEdge S‑Reit Index, slipped in the first quarter of 2026, as geopolitical tensions weighed on investor sentiment. The index rose slightly in January, but declined 7% in March amid the ongoing conflict in the Middle East, leading to negative total returns of 6.4% in Q1 2026.
Despite weaker price performance, retail investor activity in S‑Reits increased in March. Retail investors were net buyers, with net inflows exceeding S$300 million over the month, reflecting increased participation during the market pullback.
The 10 S‑Reits that recorded the highest retail investor inflows in the year thus far were $CapLand Ascendas REIT(A17U.SI)$ $Frasers Cpt Tr(J69U.SI)$ $Mapletree Ind Tr(ME8U.SI)$ $Keppel Reit(K71U.SI)$ $Lendlease Reit(JYEU.SI)$ $ParkwayLife Reit(C2PU.SI)$ $CapLand India T(CY6U.SI)$.
Retail inflows were observed across a range of sub‑sectors, including industrial, commercial, logistics and data centres.
In contrast, institutional investors were net sellers of S‑Reits, with net institutional outflows of S$225 million recorded for March. That said, selective inflows were observed in the month: Keppel DC Reit, Centurion Accommodation Reit and OUE Reit collectively recorded institutional net inflows of S$45 million.
In March, S‑Reits declined 6.9% in total returns, with weakness observed across most names. Suntec Reit and Acrophyte Hospitality Trust were the only S‑Reits that recorded positive price performance during the month.
Suntec Reit’s performance coincided with corporate developments announced in March, including approval for the sale of the Reit manager to Acrophyte Asset Management. Acrophyte, which is owned by property tycoon Gordon Tang, entered into a S$190 million agreement to acquire 100% of ESR Trust Management (Suntec) from ESR Asset Management.
The change in manager has been referenced in recent investor discussions. According to DBS Research, the transaction may provide greater alignment between the sponsor and the Reit, and could allow for potential strategic actions such as asset divestments in Australia or the sale of stakes in One Raffles Quay and Marina Bay Financial Centre 1 and 2, which could support balance sheet management and future positioning.
Separately, Hongkong Land acquired a 10.8% stake in Suntec Reit from ESR for S$541 million late last month, increasing its exposure to Singapore’s commercial real estate market.
From a macro perspective, concerns remain around inflation and interest rates, amid heightened geopolitical tensions in the Middle East and expectations that the US Federal Reserve may maintain a higher‑for‑longer rate environment. Nonetheless, some analysts have highlighted potential offsets. Phillip Securities analyst Darren Chan has pointed to the scope for improvement in FY26 distribution per unit growth, supported by lower interest expenses as benchmark Sora rates decline.
DBS Research notes that the sector’s valuations remain compelling at an average 0.95 times price‑to‑book ratio, with FY26 forward distribution yields of approximately 5.7%, representing a 3.7% spread over the 10‑year government bond, above historical averages. S‑Reits within the iEdge Singapore Next 50 Index trade at around 0.9 times price-to-book ratio, with forward distribution yields of 6.3 to 6.5%.
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