Climate costs mount for Singapore REITs despite stronger ESG adoption

About one-third of S-REITs have more than 80% of their portfolios green-certified.

Singapore-listed real estate investment trusts (S-REITs) are already facing the financial consequences of climate change, with 58% reporting monetary losses from extreme weather events over the past three years, according to a joint study by Knight Frank and REITAS.

The study, based on a review of 40 S-REIT sustainability reports and a survey of 33 REIT managers, noted 70% of managers expect green premiums for ESG-compliant assets and brown discounts for less sustainable ones.

This growing financial link is already taking shape: 42% of S-REITs have tied asset-level ESG KPIs to financing instruments, embedding sustainability into capital decisions.

Board-level commitment is now universal, with 100% of S-REITs reporting board support for ESG strategies. Meanwhile, 78% have set carbon-neutral or net-zero targets, and 50% have begun disclosing Scope 3 emissions, aligning with anticipated IFRS sustainability standards.

On-the-ground implementation varies. About one-third of S-REITs have more than 80% of their portfolios green-certified, whilst 91% have renewable-energy investment strategies.

Still, tenant collaboration remains a challenge: although 94% of REITs actively engage tenants on sustainability, more than half (55%) cite tenant resistance as a top hurdle to progress.

Amongst S-REITs that have suffered climate-related financial impacts, 58% report rising heating and cooling costs, 47% have invested in protective infrastructure, and 26% are paying higher insurance premiums.

Reflecting this, ESG due diligence is evolving: 91% now rank resilience to physical climate risk as their top ESG acquisition screen.

However, disclosure gaps persist. Only 20% of S-REITs publicly report the severity of physical risks across short-, medium-, and long-term horizons, and just 18% do the same for transition risks.