Do the drivers of reits performance differ among sectors? An insight into the different markets.
Tay, Shi Han
Date of Issue2018
School of Humanities and Social Sciences
This paper provides an analysis of the performance of Singapore REITs in different sectors. Panel data regression is employed, with dataset consisting of 17 Singapore’s listed REITs, macroeconomic factors, firm-specific factors, and sector-specific factors between the period of 2007 to 2017. REITs are classified according to its underlying property into 4 main sectors namely: retail, office, industrial and health & hospitality sectors. A pooled panel regression consisting of the 3 conventional sectors, retail, office and industrial was constructed with dividend yield to be the dependent variable. Results of Chow Test prompted us to examine each sector separately to identify the true underlying drivers of performance for each of the sector. Hence, 4 fixed effect panel regressions were ran to account for the individual sectors, including the previously excluded H&H sector. Our results suggest that there is an opposite impact of D/E ratio on dividend yields for retail and office sector due to their underlying risk nature. Next, across all 4 models, we found that larger REITs tend to perform worse than smaller REITs and we attribute it to looser cost control. Unlike previous studies, macroeconomic factors like CPI and SIBOR affects the office and healthcare & hospitality sectors. Lastly, for sector-specific factors, vacancy rates, it impacts the REITs performance in office and healthcare and hospitality sector. Whereas the price of transacted property only affects the retail sector, and insignificant for the other sectors. Our study has highlighted that each REIT sector is indeed unique in that their performance is driven by different factors and thus provides a new perspective of the REITs market, especially in the Singapore context.
Final Year Project (FYP)
Nanyang Technological University