REITs to resist slump as economy slows to 2.1%

Portfolios defy cooling 2026 momentum as supply remains tight.

Earnings for domestic REIT portfolios are expected to remain steady this year despite waning economic momentum, according to an S&P Global Ratings report.

"This is generally the case for both office and retail properties, helped by limited new supply,” said S&P Global Ratings credit analyst Yijing Ng.

The report anticipates Singapore’s real GDP growth to slow to 2.1% in 2026, down from 3.3% in 2025.

For the office sector, recent improvements in rents and occupancy for central high-quality office properties are expected to continue, on the back of a low supply pipeline, a sustained flight to quality, and foreign investment inflows.

For retail, suburban shopping malls are expected to remain stable, as tenants focus on non-discretionary spending.

However, downtown retail is expected to see slower growth, influenced by tourism trends and higher operating costs for tenants, though performance remains above pre-pandemic levels.

In the fourth quarter of 2025, the rental index of office space in the central region rose to 200.6, from 200 last year, according to data from the Singapore Urban Renewal Authority.

Meanwhile, the rental index of retail space in the central region increased year-on-year and was at 80.6, compared with 79.1 last year.