Real estate investment trusts (Reits) listed here have put in a mixed performance in the third quarter.
While analysts were generally still keen on retail Reits and some office Reits, they warned that the industrial Reit segment was beginning to see a slowdown.
Some Reits said they are also finding it difficult to find Singapore properties that will generate attractive yields to grow their portfolios, adding that this situation could get worse with a looming rise in interest rates next year.
Analysts were generally optimistic about retail Reits in the third quarter of this year.
OCBC Investment Research, for instance, upgraded its call on suburban mall landlord Frasers Centrepoint Trust from a "hold" to a "buy" last week and raised its fair value from $1.96 to $2.02.
The trust owns five suburban malls in Singapore including Causeway Point in Woodlands and Northpoint in Yishun.
OCBC also maintained a "buy" call on property giant CapitaMall Trust, which owns malls such as Plaza Singapura in Orchard Road, Junction 8 in Bishan, and Clarke Quay, with a fair value of $2.35. The trust also owns the Westgate mall in Jurong which will be completed by the end of next year.
On the other hand, Barclays said CapitaMall Trust remained the priciest Singapore Reit. It said it preferred office Reits such as CapitaCommercial Trust and Keppel Reit "for a cyclical recovery", and industrial Reits such as Mapletree Industrial Trust and Ascendas Reit for "resilient" high yields of 6 per cent to 7 per cent.
Not all retail Reits performed well. Analysts said Suntec Reit posted weak quarterly results for the third quarter and its ongoing renovation of Suntec City meant that the softness could continue into the next six months.
Mr Donald Han, managing director of property consultancy Chesterton Singapore, told The Straits Times that the retail Reit segment could suffer from higher operating costs eating into tenants' profit margins, leaving tenants unable to pay higher rents when their leases come up for renewal.
In the office Reit segment, analysts were mostly positive on Frasers Commercial Trust, which owns office properties in Singapore, Australia and Japan.
As for CapitaCommercial Trust, which owns properties such as Capital Tower and is developing a new office project CapitaGreen on the site of the former Market Street Carpark in Raffles Place, CIMB said a lack of acquisition targets may prevent the trust from performing as well as it potentially could.
It remained neutral on the trust and left its target price unchanged at $1.51.
Meanwhile, CIMB downgraded Mapletree Commercial Trust from "neutral" to "underperform", saying the trust's growth was expected to slow down. The trust owns VivoCity mall, PSA Building and Mapletree Anson. Its target price is $1.28.
However, CIMB said it expects the office market to improve in the coming months.
Analysts warned that the industrial Reit sector could face a slowdown in the coming months, though its yields right now remain solid. They said that as the industrial property market becomes more regulated and competitive, acquisitions have tapered off in recent months.
CIMB said industrial rents could also grow at a muted pace due to a relatively high supply of industrial space.
Chesterton's Mr Han said that in general, a low interest rate environment has made it more difficult for Reits to find acquisition targets that offer attractive yields.
As a result, the bulk of Reit acquisitions these days consists of "structured" deals involving sponsorship by the Reit's parent company, and this trend is likely to prevail in the next six to 12 months, he said.