I think the S-REIT rebound is becoming more interesting, but I would still be selective rather than treat it as a broad sector recovery.
Lower financing costs can provide a tailwind, but the more important test for 2027 is whether REITs can deliver sustainable DPU growth through positive rental reversions, high occupancy and disciplined capital recycling. Rate cuts alone cannot fix weak assets or leasing problems.
I would favour REITs with visible demand drivers, such as data centres, well-located commercial assets and suburban retail. Keppel DC REIT and FCT are particularly interesting to watch for different reasons. For the more challenged names, I would want to see occupancy and tenant replacement improve before becoming more confident.
Ultimately, the strongest S-REITs should be those that can grow DPU even after the interest-rate tailwind fades.
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