princess_morbucks
09-12-13, 12:32
And a recalibration of property prices.
According to Maybank Kim Eng, the industrial REITs returned -6.5% YTD and underperformed the STI Index by 5.1%.
Maybank sees Industrial REITs facing the most downside risk to impending hikes in interest rates and the possible recalibration of over-inflated property prices – which can drag down NAV.
Here's more:
The physical capital values of industrial properties have doubled in four years, compared to other segments which have appreciated only 20%-50%.
Its price-rental mismatch has also proved the most staggering. Rentals are at all-time high levels from 2008 peaks and we think FY14 rentals will start to experience slowing growth.
Other challenges for industrial REITs include a fragile global macroeconomic outlook and ample supply in the pipeline. In the medium term, Iskandar Malaysia will be a competitor, especially for lower value-added industrial activities within Singapore.
Empirical evidence suggests that warehouse rents and asset values in Singapore are respectively 2.5x and 8.5x higher than in that of Iskandar Malaysia.
- See more at: http://sbr.com.sg/commercial-property/news/guess-which-s-reits-segment-highly-risk-spiking-interest-rates?utm_source=twitterfeed&utm_medium=twitter#sthash.KAePEzs8.dpuf
According to Maybank Kim Eng, the industrial REITs returned -6.5% YTD and underperformed the STI Index by 5.1%.
Maybank sees Industrial REITs facing the most downside risk to impending hikes in interest rates and the possible recalibration of over-inflated property prices – which can drag down NAV.
Here's more:
The physical capital values of industrial properties have doubled in four years, compared to other segments which have appreciated only 20%-50%.
Its price-rental mismatch has also proved the most staggering. Rentals are at all-time high levels from 2008 peaks and we think FY14 rentals will start to experience slowing growth.
Other challenges for industrial REITs include a fragile global macroeconomic outlook and ample supply in the pipeline. In the medium term, Iskandar Malaysia will be a competitor, especially for lower value-added industrial activities within Singapore.
Empirical evidence suggests that warehouse rents and asset values in Singapore are respectively 2.5x and 8.5x higher than in that of Iskandar Malaysia.
- See more at: http://sbr.com.sg/commercial-property/news/guess-which-s-reits-segment-highly-risk-spiking-interest-rates?utm_source=twitterfeed&utm_medium=twitter#sthash.KAePEzs8.dpuf