Rather than keeping your eggs in one basket, diversification helps to reduce the risk you take on when you spread your investments across asset classes, industries and geographies.
REITs can form a section of your investments, providing you with exposure to real estate while generating passive income. However, with REITs, everyday investors have the opportunity to invest in these mega properties which we can see and touch, at an affordable price traded on the SGX.
Liquidity: A physical property takes time and money in terms of commissions, fees and taxes to sell. A REIT, on the other hand, offers high liquidity. Here are some of the risks involved. Market volatility: REITs are traded openly on the stock market and are thus subject to price volatility.
For example, with companies folding due to the implications of COVID, empty shops translate to no rental income and hence lower distribution yields. Travel, tourism and aviation are sectors that have yet to recover a year on, and this will have repercussions on the economic outlook of REITs. Remember, REITs are dependent on the rental income earned for their distribution yields.
However, the low interest rate environment could also prove to be positive for REITs as there is an opportunity for REITs to refinance loans at lower interest rates, allowing them to borrow at lower cost.
With work-from-home becoming the new norm, the need for physical office space could be reevaluated. However, offices and office buildings might not be disappearing anytime soon as there are still many job functions that require work to be done on-site. Industrial REITs manage and own industrial buildings such as your warehouses, logistics facilities and distribution centres.
In Singapore, you might find these buildings away from the central business district — think Jurong, Tuas, Woodlands, Ubi and Changi. Healthcare REITs own and manage healthcare-related real estate such as hospitals and senior living facilities.
Hospitality REITs own properties such as hotels both budget and upscale , as well as serviced apartments. There are also other types of REITs that do not necessarily fall under the categories above. These include:. You can choose a REIT based on factors such as:. There are a couple of other ways you can get REITs exposure.
This portfolio comes with fees that range from 0. By Ching Sue Mae A flat white, an adventure-filled travel and a good workout is her fuel. This Manchester United fan enjoys sharing knowledge on personal finance while chasing the dream of financial independence.
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The REITs have been grouped according to the sector that they are most exposed to. These information provides investors with general information only.
We do our best to keep this chart up-to-date and correct. And we are in constant contact with the respective REITs and trusts to ensure that it is. In case you missed these.
Australia is a key market, with the number of transactions to the country climbing 72 per cent in the first half of the year even as their amounts remained low, according to real estate consulting firm Knight Frank LLP. That said, it's not just about expanding abroad. The domestic market is also looking promising as Singapore Reits are poised to benefit from Chinese companies setting up their base in the island. Join ST's Telegram channel here and get the latest breaking news delivered to you.
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