Broker: Morgan Stanley
Date of Report: August 17, 2025

Singapore Set to Become Asia’s Top REIT Market by 2035: In-depth Outlook and Key Investment Picks

Introduction: Singapore’s REIT Market on the Rise

Singapore is rapidly emerging as Asia’s next dominant REIT (Real Estate Investment Trust) hub, with projections indicating it could overtake both Japan and Australia in market capitalization by 2035. With a robust regulatory framework, healthy IPO pipeline, and strong secondary fund-raising, Singapore’s REIT sector is poised for significant growth. Morgan Stanley’s comprehensive analysis explores the sector’s evolution, forecasts, and key beneficiaries, making this a must-read for investors, market analysts, and financial enthusiasts.

Singapore REIT Market: Historical Growth and Future Projections

In just over two decades, Singapore’s REIT sector has evolved from two listings with a US\$1–2 billion market cap to a powerhouse of 40 stocks totalling US\$74 billion. The sector is currently the third largest in Asia Pacific, trailing only Japan (US\$111bn) and Australia (US\$124bn), but that gap is narrowing quickly.

Key growth assumptions include sector-wide dividend yield spread compression to historical averages, 2% annual DPU (distribution per unit) growth, and strong equity fundraising momentum. The market’s trajectory is further propelled by the introduction of new asset classes, particularly data centers, and a healthy IPO pipeline.

Equity Fund Raising: The Engine Behind REIT Expansion

Equity-funded acquisitions remain at the heart of Singapore’s REIT growth. Over 2015–2024, S-REITs raised an average of US\$2.5–3.4 billion per year through secondary placements and IPOs. This has contributed to a steady market cap increase, even amidst a higher-for-longer interest rate environment.

Lower interest rates are expected to catalyze further fund-raising activity, especially among established REITs such as those sponsored by CapitaLand Investment Ltd (CLI), which have a proven track record of equity-funded growth.

New Asset Classes: Data Centers and Beyond

Singapore’s REIT landscape has diversified significantly, with data centers now taking center stage. Keppel DC REIT stands as a market leader, having grown from a US\$0.6 billion market cap at listing to approximately US\$4 billion, leveraging high visibility of dividend growth from M&A activity. Other innovative asset classes include healthcare, industrial, student accommodation, and hospitality.
The demand for data centers aligns with Singapore’s ambitions to be a regional data and AI inference hub. With 26 subsea cables and plans to double cable landing capacity in the coming decade, Singapore is set to attract further investment from hyperscalers and cloud providers. The city-state is expected to add at least 500MW of incremental data center capacity by 2030, with potential to triple that figure.

IPO Pipeline: New Entrants and Prospects

The Singapore Exchange (SGX) boasts over 30 new listings in its IPO pipeline, with at least four notable REITs reportedly considering listings:

Notably, Link REIT’s potential spin-off of overseas assets in Singapore could be highly accretive for shareholders, given Singapore’s mature and liquid REIT market and favorable yield spreads.

Industry Structure: External vs. Internal REIT Management

Singapore’s REITs are predominantly externally managed, with sponsors typically holding a 20–30% stake and charging management and property fees, averaging 50bps and 25bps of AUM, respectively. While some investors advocate for internalization—eliminating management fees and possibly boosting DPU by up to 3%—sponsors argue that their operational expertise and acquisition pipeline add significant value. Newer REIT listings are increasingly linking management fees to distributable income and DPU growth, aligning manager incentives with unitholder interests.

Small-to-Mid Cap REITs: Set to Benefit from Market Reforms

Singapore’s ongoing market reforms, including a S\$5bn capital injection by MAS and up to S\$50mn from new Global Investor Programme applicants, are targeted at deepening liquidity for small-to-mid-cap stocks. With 24 REITs and Business Trusts in the S\$0.5–3.0bn market cap range, these entities offer high, stable dividends (average yield of 7%) and have shown the ability to graduate to larger indices as their scale and liquidity improve.

Key Company Analyses and Top Picks

CapitaLand Investment Ltd (CLI): Asia’s Largest Listed REIT Manager

CLI manages approximately US\$50bn in Singapore REIT assets, making it the region’s largest. Including private funds, total fund AUM approaches US\$100bn, rivaling global giants like Brookfield and Blackstone. CLI’s transformation from an asset owner to an asset-light, fee-generating manager has driven structural improvement in ROE and positions the company for outsized growth as the REIT market expands.
Investment Case:
CLI targets doubling AUM to US$150bn by 2028.
Fee-related earnings expected to double, with a 15%+ CAGR.
Strong capital efficiency and consistent S$0.12/share cash dividends.
Attractive valuation at 17x P/E and 4% dividend yield.
Overweight rating, with substantial upside in bull-case scenarios.

CapitaLand Ascendas REIT (CLAR): Asia’s Largest New Economy REIT

CLAR, Singapore’s largest industrial REIT, is launching a major data center redevelopment in the UK (60MW power capacity, >S\$1bn value). This project is expected to be highly DPU-accretive over a 3–5 year horizon. With a vast Singapore industrial landbank, CLAR is positioned to capitalize on surging data center demand and potential asset divestments at attractive prices.
Investment Case:
Resilient New Economy portfolio (life sciences, logistics, data centers) at >40% of AUM.
DPU growth CAGR of 3% over 2025–2027, outperforming peers.
High occupancy (93%+) and robust rent reversions.
Overweight rating with undemanding valuation and reasonable growth potential.

Keppel DC REIT: Data Center Champion

Keppel DC REIT’s transformation from a small-cap listing to the largest listed data center REIT in Asia is a testament to both sector demand and management’s execution. It boasts one of the sector’s highest valuation premiums and a visible growth trajectory supported by M&A activity.

Other Notable REITs and Business Trusts

– **Mapletree Industrial Trust** and **Mapletree Logistics Trust**: Both are strong players in the industrial and logistics segments, with robust dividend yields and stable occupancy. – **Frasers Centrepoint Trust**: Focused on retail with a proven track record of stable returns. – **Starhill Global REIT**, **CDL Hospitality Trusts**, **Far East Hospitality Trust**: Offer exposure to hospitality, retail, and accommodation, benefiting from Singapore’s tourism recovery and high urban density.

J-REITs: Market Dynamics and Key Picks

Japan’s REIT market continues to perform strongly, led by hotel and logistics segments. The TSE REIT Index has outperformed broader indices, with yield spreads narrowing as expectations for dividend growth remain high. GLP J-REIT is highlighted as a top pick, thanks to its inflation-resilient, CPI-linked leases and capital-efficient management.

Conclusion: Singapore’s Ascent as Asia’s REIT Powerhouse

Singapore’s REIT sector is at a transformative juncture—driven by regulatory support, strategic asset diversification, innovative fundraising, and a clear pipeline of new listings. Investors seeking resilient, income-generating assets with strong growth prospects should closely track Singapore’s REIT evolution and consider key players like CapitaLand Investment Ltd and CapitaLand Ascendas REIT as core portfolio holdings.
With continued reform, sector innovation, and a strategic focus on data-driven asset classes, Singapore is set to become Asia’s premier REIT destination by 2035.