Investing in real estate — whether flipping properties or renting them out – can be highly rewarding, but the upfront capital and management demands often make it inaccessible. 

For those seeking a simpler, more affordable way to invest in property, Singapore Real Estate Investment Trusts (S-REITs) offer exposure to a diversified portfolio of income-generating properties without the hassle of direct ownership.

With consistent dividend payouts and lower entry costs, S-REITs can be a valuable addition to your portfolio. This guide will walk you through everything you need to know about investing in S-REITs.

Table of Contents

• What Are S-REITs?
• Why Invest in REITs in Singapore?
• 10 Years of Singapore REITs Performance: Trends and Takeaways
• How S-REITs Work and Key Roles Explained
• Risks Associated with Investing in REITs
• How to Buy Singapore REITs

What Are S-REITs?

S-REITs are investment trusts that invest in a portfolio of income generating assets such as shopping malls, offices, industrial parks, hotels, and healthcare properties.

Most of these properties are based in Singapore. S-REITs pool together money from investors to purchase these properties, which are then leased out to tenants to generate revenue (primarily rental income). Unlike directly owning a rental property, where landlords must manage tenants and maintenance, investing in S-REITs provides exposure to real estate with lower capital, less effort, and greater diversification.

Read our comparison between REITs and rental properties to see which is the better investment.

S-REIT investors, also known as unit holders, usually receive this rental income in the form of quarterly or semi-annual dividends. The average dividend yield for S-REITs is about 5% to 6%.

Apart from dividends, unit holders typically also earn returns through capital gains when the price of the REIT appreciates due to rising property values, or when they sell the REIT at a higher price than they purchased it for.

Similar to stocks, S-REITs are listed on the Singapore Exchange and you can invest in them the same way you would in a stock. But do note that S-REITs have a unique structure and regulatory framework that differentiates them from traditional listed companies.

Why Invest in REITs in Singapore?

S-REITs offer an easy and cost-effective way to invest in real estate while enjoying passive income and liquidity. With lower capital requirements, steady dividend payouts, and diversification benefits, they provide a compelling alternative to physical property investments.

Here’s why they stand out:

Lower Capital Requirements

S-REITs require minimal upfront investment, allowing investors to start with as little as 100 shares, unlike physical property, which involves high down payments and taxes.

Passive Income Through Dividends

With mandatory dividend distributions of at least 90%, S-REITs provide consistent passive income, averaging 5% to 6% dividend yields — higher than traditional savings options.

Better Liquidity for Investors

Unlike illiquid real estate, S-REITs are traded on SGX, enabling investors to buy or sell instantly without the long wait times associated with selling physical property.

Portfolio Diversification

Instead of concentrating capital in a single property, S-REITs spread risk across multiple assets and sectors, including retail, industrial, and hospitality properties.

Tax Benefits for Singapore Investors

S-REIT dividends are not taxed, whereas rental income from property is subject to income tax and property tax — making REITs a more tax-efficient investment option.

S-REITs vs. Physical Property: Are REITs a Good Investment?

For investors choosing between S-REITs and physical property, the table below highlights key differences:

Factor	S-REITs	Physical Property
Capital required	Low	High – down payment, stamp duty, taxes
Management effort	None – managed by professionals	High – leasing, maintenance, and repairs
Liquidity	High – can be sold anytime on SGX	Low – property sales take months
Diversification	High – invests in multiple properties	Low – usually limited to one property
Taxation	Dividends are not taxed for individuals	Rental income is taxable, property tax applies

10 Years of Singapore REITs Performance: Trends and Takeaways

Over the past decade, S-REITs have demonstrated strong long-term investment potential, driven by stable dividend yields and capital appreciation. As the largest REIT market in Asia (ex-Japan), Singapore’s REIT sector has grown at a compound annual growth rate (CAGR) of 6%, reinforcing its importance in the region.

Overall Trends and Key Performance Metrics

• Market growth: The S-REIT sector now comprises 40 listed REITs and property trusts with a total market capitalisation of S$100 billion (as of August 2024).
• Dividend yields: S-REITs continue to offer attractive dividend yields, averaging 6.9% (as of 29 November 2024), well above the 2.7% yield of Singapore’s 10-year government bonds.
• Global expansion: Over 90% of S-REITs own overseas properties, highlighting their role in global real estate investment.
• Resilience and recovery: Despite periods of market downturn, the sector has remained a strong performer for long-term investors, with many REITs delivering impressive total returns.

How S-REITs Work and Key Roles Explained

How S-REITs Work?

S-REITs are structured to pool funds from investors to acquire and manage income-generating real estate properties. These properties are then leased to tenants, and the rental income is distributed to investors as dividends. 

Here’s a step-by-step breakdown of how the structure works:

1. An S-REIT raises capital from investors through an IPO on the Singapore Exchange (SGX). Investors become unit holders by purchasing REIT shares.
2. The funds collected are used to purchase commercial, industrial, retail, or hospitality properties. These properties form the core assets of the REIT.
3. The acquired properties are leased to tenants, such as businesses, retailers, and corporations. The rental income generated serves as the main revenue source for the REIT.
4. After deducting management fees, operational costs, and interest expenses, the remaining rental income is distributed to investors as income distributions (dividends). By regulation, S-REITs must distribute at least 90% of their taxable income to qualify for tax transparency benefits.

Key Roles in an S-REIT

S-REITs involve multiple entities that work together to ensure smooth management, income generation, and regulatory compliance.

Property Manager

The property manager is responsible for the day-to-day management of the REIT’s properties. This includes:

• Collecting rent from tenants
• Marketing and leasing vacant units
• Implementing asset enhancement initiatives to improve property value and occupancy rates

REIT Manager (Trust/Asset Manager)

The REIT manager, also known as the trust or asset manager, sets the strategic direction of the REIT. Key responsibilities include:

• Identifying new properties for acquisition
• Deciding when to divest underperforming assets
• Optimising portfolio performance to maximise returns for unit holders

Sponsor

The sponsor is typically a property developer or investment firm that provides the initial assets and backing for the REIT. The sponsor often:

• Owns a significant stake in the REIT
• Controls both the property manager and REIT manager
• Provides a pipeline of future assets for acquisition

For example, CapitaLand Investment Limited sponsors CapitaLand Ascendas REIT (CLAR, SGX:A17U), Singapore’s largest industrial REIT.

Trustee

The trustee holds the REIT’s assets on behalf of unit holders and ensures the REIT is managed in accordance with the trust deed and regulatory requirements. The trustee’s primary duties include:

• Safeguarding investors’ interests
• Overseeing compliance with REIT regulations
• Ensuring fair and transparent asset management

Why These Roles Matter to Investors

Understanding these roles helps investors assess:

• Management quality — A well-managed REIT with strong sponsors and experienced managers is more likely to deliver consistent returns.
• Risk factors – High levels of sponsor ownership may indicate strong backing, but also pose potential conflicts of interest.
• Long-term stability — A strong trustee and governance structure ensures that the REIT operates in compliance with investor protections.

By evaluating the property portfolio, management expertise, and financial health, investors can make better-informed decisions when investing in Singapore REITs.

Risks Associated with Investing in REITs

While REITs, especially the ones in Singapore offer attractive dividends and capital appreciation, they also come with inherent risks. Understanding these risks can help investors make informed decisions and avoid potential pitfalls.

Market Risk

REITs are publicly traded, meaning their prices fluctuate based on broader economic conditions, interest rate changes, and investor sentiment. For example, Manulife US REIT struggled as declining office demand in the US affected occupancy rates and rental income. Investors should monitor sector trends and macroeconomic factors before investing.

Income Risk

REITs rely on rental income from tenants. If occupancy rates decline due to economic downturns or shifting market trends, distributions to investors may be affected. The hospitality and retail sectors tend to be more volatile, as they are highly dependent on consumer spending and foot traffic. REITs with weak tenant demand or high vacancy rates may experience lower rental income and reduced dividends.

Liquidity Risk

While REITs are more liquid than physical property, some thinly traded REITs can experience low trading volume, making it harder to exit positions at a favourable price. Investors should check average daily trading volume before investing in smaller REITs.

Leverage Risk

Many REITs use debt to finance property acquisitions, which can amplify returns but also increase financial strain if interest rates rise. For instance, Lippo Malls Trust faced refinancing issues due to its high debt burden, contributing to its sharp decline in value. Investors should assess a REIT’s gearing ratio (debt-to-assets) to ensure it remains at a sustainable level.

Should You Invest in S-REITs?

S-REITs may be a good fit if you:

• Want steady passive income through dividend distributions.
• Are looking for a lower-cost way to invest in real estate without owning physical property.
• Prefer liquid investments that can be traded easily on the stock market.
• Seek diversification beyond traditional stocks and bonds.

While S-REITs are a good investment for many, they still come with risks, such as market fluctuations, leverage exposure, and sector-specific challenges. Before investing, ensure that S-REITs align with your financial goals and risk tolerance.

How to Buy Singapore REITs

Investors can buy S-REITs through brokerage platforms like Syfe’s Brokerage, ETFs, or managed portfolios such as Syfe REIT+. 

Buying Individual REITs or REIT ETFs

If you prefer a hands-on approach, you can invest in:

• Individual REITs – Buy specific S-REITs listed on the Singapore Exchange (SGX) based on your preferred property sector (e.g., retail, industrial, hospitality).
• REIT ETFs – Invest in a basket of REITs through exchange-traded funds (ETFs) that track an index, offering instant diversification.

Steps to Buying Individual REITs or REIT ETFs in Singapore

Step 1: Open a brokerage account with an SGX-approved platform (e.g., Syfe).

Step 2: Research S-REITs or REIT ETFs based on dividend yield, property sector, and financial stability.

Step 3: Place an order via your brokerage account (minimum investment is typically 100 shares per REIT).

Step 4: Monitor your investments and reinvest dividends for long-term growth.

Tip: REIT ETFs provide instant diversification, making them ideal for investors who want exposure to multiple REITs without selecting individual ones.

Investing Through Syfe REIT+ Portfolio

For investors who prefer a hands-free, diversified, and cost-efficient approach, Syfe REIT+ is a managed portfolio designed for easy access to Singapore’s top-performing REITs.

Why Choose Syfe REIT+?

• Diversification – Invest in the 20 largest SGD-denominated Singapore REITs, including CapitaLand Integrated Commercial Trust, and Mapletree Logistics Trust and Keppel DC REITs. These REITs are selected for their SGD denomination, liquidity, large market capitalisations, and strong backing by reputable management teams.
• No minimum investment amount – Start investing with any amount at any time.
• Automated reinvestment – Dividends are automatically reinvested to enhance long-term returns. Quarterly dividend payouts are also available. 
• Lower fees – No brokerage fees per transaction, making it cost-effective.

Start investing in S-REITs effortlessly with Syfe REIT+ today!