Real estate investment trusts (Reits) will likely remain the flavour of the season as oversupply and rent revenue concerns appear priced in while interest rates are likely to stay low for longer.

OCBC Investment Research said in a report yesterday that it remains overweight on the sector, and has added SPH Reit and Mapletree Greater China Commercial Trust to its list of top picks.

Last quarter, 21 of the 23 Reits here covered by OCBC delivered results that met expectations, with only OUE Hospitality Trust and Ascott Residence Trust disappointing.

Even retail Reits have held their own, noted OCBC analysts Andy Wong and Eli Lee: "Only OUE Hospitality Trust's Mandarin Gallery and Starhill Global Reit's Wisma Atria turned in negative rental reversions during the period."

OCBC named the hospitality and industrial sub-sectors as the weakest-performing. Among the industrial Reits, small-caps like Sabana Reit and Cambridge Industrial Trust were hit by negative rental revisions.

But Mr Derek Tan, DBS vice-president for group equity research, noted that on average, Reits in the office and hospitality sub-sectors are trading at a 20 per cent discount to net asset value per unit - which could make buying on dips a good strategy.

Yields for hospitality Reits are averaging 7 per cent, which is higher than the historical mean, said DBS Group Research in a note. Yields for office Reits are 6.3 per cent, also above the historical mean.

"The oversupply risk is already mostly priced in, and we believe office rents are going to bottom out by the middle of next year," Mr Tan said. "We also have a preference for hospitality not because the sector is expected to do an amazing turnaround, but because we expect flattish or lower declines in rental revenue per available room."

He covers 36 Reits here and is "fairly neutral" on the sector: "In September, you can be sure there will be two schools of thought, with some expecting a rate hike and doing profit-taking in the near term. So that's an opportunity to buy on dips."

But Maybank Kim Eng analyst Derrick Heng, who covers office Reits, was more cautious: "While the benign interest rate environment will continue to lend support to office Reits, we believe it is premature to raise exposure to the sector.

"Oversupply in Singapore's office market will persist for the next two to three years and we see further pressure on rents on vacancy rates remaining high."