By Navin Sregantan
If you’ve only got a minute:
- Those seeking property exposure can consider S-Reits, which offer investors relatively attractive, tax-exempt dividends and a low barrier to entry.
- S-Reits invest in property ranging from single sectors (commercial, healthcare, hospitality, industrial and retail) to a combination of them.
- Investors can further diversify and simplify their approach through Reit ETFs or professionally managed solutions like digiPortfolio, which are cost-effective alternatives to owning Reits directly.
Singapore's enduring fascination with real estate is well-known, with ownership historically serving as a significant driver of wealth. For previous generations, investing in property was often a reliable path to wealth accumulation and legacy planning as it consistently delivered returns that outpaced inflation.
However, the landscape for younger Singaporeans has shifted dramatically. Recent years have seen property price increases outpacing wage growth, which make direct property investment a less viable option.
Coupled with rounds of property cooling measures for more than a decade, acquiring a second residential property for investment purposes has become less attractive for most Singaporeans, regardless of age.
Fortunately, for those seeking property market participation, investing in Real Estate Investment Trusts (Reits) provides retail investors with accessible, diversified exposure without the high costs of direct ownership.
Read more: What you need to know about Reits
S-Reits: An overview
Since their introduction on the Singapore Exchange (SGX) in 2002, Singapore-listed Reits (S-Reits) have steadily grown in popularity among retail investors. Several key factors contribute to this appeal.
A major draw is the regulatory requirement for S-Reits to distribute a minimum of 90% of their taxable income to unitholders as dividends. This makes them an attractive proposition for income-focused investors. These distributions, typically received on a quarterly or semi-annual basis, are also tax-exempted.
The strong income potential of S-Reits is evident in their performance. As of May 30, 2025, S-Reits offered an average dividend yield of 6.8%¹ – a compelling return that significantly outpaces the Straits Times Index’s (STI’s) 5.1% yield, the MAS Benchmark 10-Year Government Bond’s 2.4% yield, and typical term deposit rates.
Historically, S-Reits have consistently delivered average yields ranging between 5% and 6%. This consistent outperformance has traditionally positioned Singapore as one of the highest-yielding Reit markets globally.
Beyond attractive yields, S-Reits offer relatively low barriers to entry for investors. Individuals can purchase S-Reits on stock exchanges through brokers like DBS Vickers. For instance, if an S-Reit’s unit price is S$2, the minimum investment of 100 units would require an investment of just S$200 (excluding brokerage fees and tax).
This allows for investment in income-generating real estate assets without needing to commit large sums or secure a property loan.
The S-Reit market is also robust and diverse. As of May 30, 2025, there are 40 S-Reits and property trusts listed on the SGX, collectively boasting a market capitalisation of S$88 billion, representing 10% of the overall Singapore stock market¹.
Notably, 8 S-Reits are constituents of the STI, marking the highest representation ever for this asset class. Furthermore, over 90% of S-Reits and property trusts hold overseas properties in their portfolios, offering global diversification.
Read more: Practical ways to invest in Reits
Find out more about: DBS Vickers Online Trading Account
Other property-focused trusts
Investors can also consider Property Trusts and Stapled Trusts, which share similarities to S-Reits yet possess distinct characteristics.
There are 8 such entities listed on the SGX, investing in a wide array of properties, including shopping malls, residential properties, offices, industrial facilities, hospitality, and healthcare properties.
Property Trusts
Unlike S-Reits, Property Trusts are not mandated to distribute 90% of their income as dividends, which means they do not receive the same tax transparency treatment from IRAS.
They are also not subject to the same debt or asset size limits, nor do they enjoy the tax incentives that Reits do.
Stapled Trusts
Stapled Trusts legally combine 2 or more securities, such as Reits, Property Trusts, or even property stocks, to be traded as a single entity. Importantly, only the Reit component within a Stapled Trust must adhere to Reit listing requirements.
The property sectors
The type of properties held by Reits, property trusts and stapled trusts can be split into 5 broad categories.
It is important to note that each sector responds differently to economic cycles, offering various risk and return profiles for investors.
Read more: How to evaluate and analyse Reits
Diversified Reits
S-Reits are not limited to holding just one category of property. Many, including some of the largest, choose to hold a mix of property types or other real estate assets.
Known as Diversified Reits, they offer a strategic advantage by mitigating risks from industry-specific downturns. By hiolding various property types, they avoid over-reliance on a single sector.
For example, during the Covid-19 pandemic, S-Reits focused solely on retail or office properties faced significant challenges due to lockdowns and work-from-home shifts.
In contrast, a Diversified Reit that also held logistics warehouses (which saw a boom in e-commerce) or data centres (experiencing increased demand for digital services) would have seen these segments offset losses from their struggling retail or office assets.
This diversification provides resilience and helps deliver stability and potentially more consistent returns, as the performance of one property type can offset weaknesses in another, offering a balanced investment proposition.
How else can you invest in Reits?
Directly purchasing individual Reits can be costly, especially when building a diversified portfolio due to cumulative brokerage fees.
For those seeking broader exposure and professional management, they can consider investing through Reit ETFs and Discretionary portfolio solutions.
Reit ETFs
They offer a convenient, cost-effective way to gain diversified exposure to the Reit sector through a single investment. They benefit from professional management, which includes strategic rebalancing and handling corporate actions, simplifying the investment process for unit holders.
What can you do via digibank?
You can invest in S-Reits through a Regular Savings Plan (RSP) like Invest-Saver where you can purchase units in the Nikko AM-StraitsTrading Asia ex Japan Reit ETF and/or the CSOP iEdge S-REITs Leader ETF for as little as S$100 each month.
Find out more about: Invest-Saver
Discretionary portfolio solutions
For a hands-off, expertly managed approach, Discretionary Portfolio Solutions like digiPortfolio allow professional fund managers to actively tailor and manage a Reit portfolio on your behalf, aligning with your specific risk profile and objectives.
What can you do via digibank?
An alternative is to consider a discretionary portfolio like digiPortfolio. For example, the Asia Portfolio, has an up to 8% exposure (high risk portfolio) to S-Reits through Lion-Phillip S-REIT ETF as of June 30, 2025.
Find out more about: digiPortfolio
In summary
Given their income-generating qualities and high liquidity, Reits can be a valuable addition to your investment portfolio.
When investing, do align with your personal preference for specific property markets by selecting from the 5 main sectors, which include commercial, healthcare, hospitality, industrial, and retail.
Alternatively, Diversified Reits offer exposure to a variety of different sectors, providing a more well-rounded portfolio and inherent diversification.
As with any investment, while considering the characteristics of the Reits you plan to invest in, always be mindful of the different types of fees involved before making your final decision.
