Singapore Office REITs Deliver Robust H1 Performance on Strong Occupancy and Higher Rents

Keppel Reit delivered strong double-digit growth, with net property income increasing 13.1 per cent year on year to S$122.5 million, and distribution from operations surging 25.2 per cent to S$119.6 million. This was driven by improved performance from the existing portfolio, an acquisition, and a higher share of joint ventures from the acquisition of an additional one-third interest in MBFC Tower 3.

However, distribution per unit slipped 4 per cent year on year due to the enlarged unit base. Keppel Reit recorded a portfolio-wide rental reversion of 12.8 per cent. Weighted average signing rents for its Singapore CBD portfolio in H1 was S$13.14 psf a month, while expiring leases in FY26 had an average rent of S$12.24 psf a month.

Suntec Reit demonstrated a strong performance, with distributable income rising 25.5 per cent year on year to S$116.5 million for H1 FY26, pushing DPU up 24.8 per cent. The robust showing was driven by stronger operational performance of the Singapore office and retail portfolio, lower financing costs, and lower Australia withholding tax provision. Suntec Reit hit an overall committed occupancy of 99.5 per cent among its Singapore office assets, with positive rental reversion of 10.1 per cent.

OUE Reit reported a 28.6 per cent increase in DPU to 1.26 Singapore cents for H1 2026, driven by a similar jump in distributable income and anchored by stronger hospitality performance, the acquisition of Salesforce Tower and significantly lower interest expenses. Positive rental reversion stood at 4.7 per cent for office lease renewals in Q2 2026. The manager noted that tightening office supply in the CBD gives OUE Reit a favourable window to rejuvenate its tenant portfolio.

While CBD performance remained robust, ongoing supply tightness may also benefit other office assets as companies consider decentralised options. Mapletree Pan Asia Commercial Trust, which holds office assets mainly in the HarbourFront and Alexandra precincts, said its Singapore portfolio remained resilient. Mapletree Business City recorded a committed occupancy of 94.3 per cent, with a positive rental reversion of 0.8 per cent.

Knight Frank noted the market dynamics of the first six months of the year is expected to prevail in the remaining half, and likely into 2027. It added that rents are projected to increase by 3 to 5 per cent in 2026 given the tight CBD supply, with decentralised spaces capturing spillover demand when CBD occupiers require lower cost options to accommodate growth.

DBS Group Research noted last week that their preference continues to be office and industrial Reits with positive rental reversions, strong balance sheets and visible organic growth. This includes CapitaLand Integrated Commercial Trust, Keppel Reit and CapitaLand Ascendas Reit. CICT is scheduled to announce its first half results on 12 August.