THE low interest rate environment is expected to bode well for local real estate investment trust (REIT) players, due to the lowered required rate of return and borrowing cost.
MIDF Research in a recent report states that while this might be the case in theory, the yield spread is unlikely to remain attractive at the moment.
“Identifying and purchasing the right property that fits into the portfolio at the right price will be something that REIT managers will focus on. Based on channel checks, the impact of lower interest rates on borrowing costs is minimal thus far. In the near-term, we expect REITs’ core net income to have a bigger impact on their unit price performance.”
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