Singapore Inter Bank Offered Rate (SIBOR) is an important concept to note for REITs investors in Singapore as it will have a bearing on the prices of your units. SIBOR is the Singapore equivalent of LIBOR and denotes the rate at which banks lend funds to each other. As with LIBOR, the rate will vary according to loan tenure and is usually used as a base to set floating rate loans. Hence SIBOR is very much seen as a proxy of prevailing interest rates in Singapore.

One of the reasons REITs have become popular amongst investors in Singapore is the relatively low SIBOR. Previously, fixed deposits and savings were the investments of choice for this largely conservative populace. SIBOR is updated daily by the Association of Banks in Singapore (ABS) and is largely referenced upon by investors in Asia. Should SIBOR picks up, the popularity of REITs as an investment vehicle in this region may be affected even if just slightly.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.