Mapletree Industrial Trust's third data-centre BTS. (Photo: Mapletree Industrial Trust)

The current oversupply of industrial spaces in Singapore is not a secret, and a number of industrial REITs exposed to the city state have cited this factor as the primary reason behind softer-than-usual earnings in recent quarters.

“The Singapore economy is experiencing a mixed sectoral growth with robust growth in the electronics and precision engineering sectors but persistent contraction in the general manufacturing and transport engineering clusters”, said Roy Tan, CEO of Soilbuild REIT’s manager, in a statement on its 3Q 2017 results.

Soilbuild REIT itself reported 1.8% year-on-year fall in distribution per unit (DPU) for its 3Q 2017 results.

Echoing this sentiment is the manager of AIMS AMP Capital Industrial REIT, which saw a 7.3% year-on-year fall in DPU for 2Q 2018.

“..the Singapore industrial property market still remains soft, with the oversupply situation continuing to exert a downward pressure on rentals and occupancy”, said Koh Wee Lih, CEO of AIMS AMP Capital Industrial REIT’s manager.

However amid the sea of negative sentiments, Mapletree Industrial Trust is one Singapore-listed industrial REIT that has gone against the grain, and reported a 6% year-on-year increase in 2Q FY17/18 on the back of contribution from development projects.

The following are three reasons why the REIT is expected to continue its stellar performance in the next quarters.

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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.