Singapore’s moribund IPO market looks to Reits for lifeline
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Lower interest rates make Reits more attractive to investors, with Japan’s NTT said to be considering a $1.28 billion listing in Singapore.
ST PHOTO: GIN TAY
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HONG KONG – Singapore’s stagnant initial public offering (IPO) market is relying on a boost in 2025 from real estate investment trusts (Reits).
Japan’s Nippon Telegraph and Telephone (NTT) is considering a data centre Reit listing that could be worth as much as US$1 billion
An index for Singapore-based Reits has risen 14 per cent during the third quarter, coming close to wiping out losses from earlier in the year, as a global decline in interest rates makes the sector more attractive to investors.
“We are constructive on the equity capital markets in Singapore for the fourth quarter and onwards,” said Mr Mrinal Parekh, head of equity capital markets for South-east Asia and India at BNP Paribas. He said investors have already started asking questions about Reits.
Issuance from Reits would be a much-needed shot in the arm for Singapore’s stock exchange, which is set for its worst year for IPOs in more than a quarter of a century.
Just one company has raised money from an IPO on the exchange in 2024, according to data compiled by Bloomberg. Insiders are worried about the chances of a revival.
Lower rates will be a double boost for the sector, cheapening Reits’ own borrowing costs while making the dividends they pay more attractive to investors. That could create a virtuous circle for new listings.
Mr Ken Foong, an analyst covering real estate at Bloomberg Intelligence, said: “There could be more fund-raising activities and more investor interest in Reits, which creates a better environment for IPOs.”
Data centres are among the bright spots for Reits thanks to the boom in artificial intelligence, Mr Foong said. Tenants in such Reits are more likely to keep their leases than other companies because of the high cost of relocating to other data centres, he added.
NTT’s potential US$1 billion listing would be the biggest in Singapore since NetLink NBN Trust’s IPO raised US$1.7 billion in 2017, data compiled by Bloomberg shows.
CapitaLand Integrated Commercial Trust, a Reit that owns retail and office properties, in September raised about $1.1 billion to buy a 50 per cent interest in Ion Orchard
