Moody's sees recovery in S'pore retail and office properties
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The significant easing of Covid-19 restrictions in Singapore means commercial property owners will stand to benefit from a boost in earnings on the back of strong pent-up demand, according to Moody's Investors Service.
The credit rating firm believes that improving demand and the limited new supply of quality office space in the Central Business District will continue to lend office landlords more bargaining power over rents.
In a report yesterday, Moody's highlighted real estate investment trusts (Reits) CapitaLand Integrated Commercial Trust (CICT), Frasers Centrepoint Trust (FCT) and Mapletree Commercial Trust (MCT) as key beneficiaries from the recovery in both retail and office demand.
The company expects earnings of CICT and MCT to increase substantially following recent merger and acquisition activities, while FCT's earnings are expected to remain stable in financial year 2022 to financial year 2023.
All three Reits are projected to see an aggregate Ebitda (earnings before interest, taxes, depreciation and amortisation) increase of 22 per cent this year and a further 14 per cent next year.
"Higher retail sales and footfall following the easing of corona-virus measures will reduce the need for rent rebates and the likelihood of rent deferrals, which will support earnings recovery for retail property owners."
Moody's sees a strong recovery in earnings growth for large property developers City Developments, GuocoLand and UOL Group, as their investment property and hospitality operations make up 35 per cent to 70 per cent of total assets combined.
Moody's projects the three developers' aggregate Ebitda to rise by 18 per cent this year and a further 22 per cent next year, primarily due to an expected earnings recovery at their investment properties and hotel operations.
Singapore's residential property market is anticipated to experience weaker contracted sales over this year and next year. The research team said this is given lower sales volume and the likelihood of subdued launches following a low volume of land transactions in recent years.
Demand for private residential properties will also be dampened by rising mortgage rates, cooling measures and tax hikes, said Moody's.
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