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Hey fellow REIT investors! If you’ve been watching the REIT market lately, you might be thinking, “Here we go again—REITs are falling. Maybe interest rates are spiking again?”

And you wouldn’t be alone. Because over the past two weeks, Singapore REITs have been sliding. Even steady names like CapitaLand Integrated Commercial Trust or CICT and CapitaLand Ascendas REIT or CLAR —the ones investors usually run to for safety—are down.

So most people are probably thinking:

“Must be rising rates again.”

“Better stay away.”

But here’s the twist that nobody’s talking about: Singapore interest rates are actually going down.

That’s right. The 6-month T-bill now offers a cut-off yield of 2.30%, while the 1-year T-bill stands at 2.29%.

And yet, REITs are falling? It doesn’t add up.

Unless… you realise the market’s been fixated on the wrong headline! The US 10-year Treasury yields are back at or above 4.5%. This is what I personally call my fear index for REITs, and that’s exactly what’s been driving fear nowadays. Investors are reacting to Fed Chair, Powell, to CPI numbers, and to rate delay chatter in the US.

But here’s the thing: Singapore is not the US. Our inflation is lower. Our central bank isn’t the Fed. And our bond market is sending a very different signal.

That’s why today, I want to talk about this growing divergence between US and Singapore interest rates, and what it really means for REIT investors like you and me.

Because if you’ve been relying on global headlines to make local decisions, I think you might be missing the signal hiding in plain sight.

Before we dive in, let me remind you that this post is for informational purposes only and not financial advice. Always do your own research and consult a licensed financial adviser before making any investment decisions. I own some of the REITs discussed, but what works for me might not work for you.

Alright, let’s get started. 

What The Bigger Picture Looks Like – Why The Divergence?

Let’s start with what’s happening in the US.

Just a few months ago, investors were hoping the Fed would start cutting rates by mid-year. But now? That optimism has all but vanished.

Inflation is easing—but not fast enough. And the Fed? Still cautious, still signalling patience.

At the same time, US government debt levels are ballooning, and all that debt needs buyers. So bond yields are creeping higher again—not necessarily because the economy is overheating, but because investors want better compensation for the risks they’re taking.

That’s how we ended up with the 10-year Treasury yield back above 4.5%, even while the S&P 500 pushes new highs. It’s like the stock market is celebrating—but the bond market is quietly muttering, “You sure can celebrate or not?”

Now let’s flip to Singapore—and this is where the contrast gets interesting.

Unlike the Fed, the Monetary Authority of Singapore (or MAS) doesn’t set interest rates directly. It manages monetary policy through the exchange rate. And since M.A.S. has already completed its tightening cycle, our local rates are drifting lower.

The clearest sign? Auctions are still seeing strong demand, with bid-to-cover ratios just above 2.0. Not sky-high, but definitely healthy.

So why are investors still piling into Singapore Government Securities (or SGS)?

Because when the world gets noisy—Singapore gets attractive.

We’re talking about a market that offers AAA credit rating, political and economic stability, and a strong, well-managed currency.

And with global uncertainties—from US debt levels to European stagnation to China’s uneven recovery—Singapore stands out as a safe harbour.

So local and international investors are rotating capital into SGS and T-bills. That pushes prices up, and yields down. 

And for anyone borrowing in SGD—like our REITs—that’s quietly improving the refinancing environment.

And the contrast couldn’t be clearer. The US is grappling with ballooning debt, political dysfunction, and now, even a credit rating downgrade by Moody’s – no longer AAA. Meanwhile, Singapore maintains its AAA rating, strong fiscal discipline and investor confidence.

While the US bond market is flashing caution, Singapore’s is offering calm—and even a slight tailwind. And yet, the market hasn’t noticed.

Investors are still reacting to Powell, still fearing the US 10-year, and still selling REITs across the board.

But if you look carefully—this divergence in global interest rates isn’t noise. It’s a map for savvy investors. (And we’ll get to how to read it in a moment.)

What This Means for REITs

So if the Singapore interest rate environment is easing… why are REITs still falling?

Because the market’s still stuck in US mode. Investors are reacting to headlines about the Fed, rising Treasury yields, and sticky inflation—as if those risks apply evenly to every REIT out there.

But that’s where this “map” that I mentioned becomes valuable.

Because if you know which REITs borrow mainly in SGD, have strong balance sheets, and operate in resilient sectors, then what looks like a sell-off is actually a chance to reposition.

Let’s look at four prime examples of REITs with mainly Singapore debt, that are quietly benefiting from falling local rates.

Frasers Centrepoint Trust (or FCT) – the suburban retail sleeper

FCT’s portfolio of suburban malls has held up well post-COVID, and now it’s getting another boost—from lower borrowing costs.

In just one quarter, its average interest rate dropped from 4.0% in Q4 2024 to 3.8% in Q1 2025. 

That might sound small, but across hundreds of millions in debt, it translates to real savings—and real support for future DPU.

Despite this, FCT’s share price declined from $2.26 on May 2 to $2.19 on May 16, a drop of approximately 3.1%.

The market might not have noticed yet. But the numbers are already improving.

CapitaLand Integrated Commercial Trust (CICT) – the steady anchor

CICT is one of the few REITs I consider a long-term core holding. It owns prime retail and office assets in Singapore and has a rock-solid sponsor.

And just like FCT, it’s starting to benefit from easing interest costs.

Its average interest rate fell from 3.6% to 3.4% between Q4 and Q1.

Again—not a dramatic drop, but a meaningful one.

Especially in a rising rent environment for retail and with steady office occupancy, this rate tailwind could help DPU stabilise sooner than expected.

Yet, CICT’s share price fell from $2.12 on May 2 to $2.06 on May 16, a decrease of approximately 2.8%. 

Far East Hospitality Trust (or FEHT) – quietly gaining strength

F.E.H.T. might be small, but it’s positioned well for a recovery. Tourism is back, hotel performance is improving—and now, so is its financing cost.

From 4.1% in Q4 2024 to just 3.5% in Q1 2025, this is the biggest interest rate improvement among the REITs we’ve looked at.

Lower interest expense directly boosts its bottom line, and with demand from both leisure and business travellers rising, FEHT could surprise investors on the upside.

However, FEHT’s share price actually increased slightly from 55.5 cents on May 2 to 56.5 cents on May 16, but is relatively flat. 

OUE Commercial REIT – a high-yield bet getting healthier

OUE REIT is often seen as riskier, with a mix of Singapore and overseas properties, and higher gearing. But even here, the interest rate relief is real.

Its average interest rate fell from 4.7% to 4.2% quarter-on-quarter.

That’s a sizable improvement, and it comes just as the REIT works on stabilising its office portfolio and growing hotel contributions.

It’s still not without risk—but the falling cost of debt makes the high yield look more defensible than before.

Despite this, OUE REIT’s share price fell from $0.29 on May 2 to $0.28 on May 16, a decrease of approximately 3.4%.

And here’s the crazy part—

You’ve got REITs cutting their borrowing costs by 20 to 60 basis points in just one quarter… and their share prices are still dropping!

That’s like a company reporting lower expenses, improving margins, and the market saying, “Meh, we’re still scared.”

This isn’t market noise—is it opportunity being ignored? Of course, nothing is certain and there are other risks, but when fundamentals are improving, but prices are falling… that’s our cue to think harder.

Now the caution flags…

Not all REITs benefit from falling Singapore rates.

Keppel Pacific Oak US REIT or KORE and Manulife US REIT are the clearest examples. With their assets entirely in the US, their debt in USD is perfectly reasonable. 

Even if Singapore rates fall to 2%, it won’t help these REITs because the debt, the assets, and the risks are all tied to the US. And, the Fed’s delay in rate cuts just adds more pressure.

So don’t look at REITs as one giant asset class.

Some are built to benefit from falling Singapore interest rates. Others won’t feel the difference at all.

The sell-off over the past two weeks might feel discouraging—but if you understand the divergence in global rates, this moment might actually be an opportunity in disguise.

And if you’ve enjoyed the contents so far, please take a moment to give this Uncle a ‘Like’, while I continue to look out for trends that can help all of us make our retirement a little bit better. Alright, back to the post.  

The Dividend Uncle’s Take – Just Follow The Map

So here’s what we’ve covered.

Right now, investors are reacting to rising US yields, but completely overlooking what’s happening here in Singapore—where interest rates are actually falling.

And yes, REITs have been dropping again. But the real story isn’t in the share price.

For investors staring at this sea of REITs wondering what to do next…This divergence in global interest rates?

This… is a map, an investment map. It tells you which REITs are sailing with the current—and which ones are rowing against the tide. If you’re a real dividend investor, you don’t need to follow the crowd. You just need to read the map.

Because right now, it’s pointing to SGD-based REITs with strong balance sheets and stable income streams.

And here’s how I’m using that map in my own portfolio.

First, I’m not chasing REITs just because they’re down. There’s a difference between undervalued and against the tide.

Some REITs are being dragged down by sentiment—but have the balance sheets, asset quality, and local exposure to come out stronger as borrowing costs ease.

These are the ones I’m holding—or even adding to, quietly.

Far East Hospitality Trust: This one’s been on my radar for a while—and I’ve taken a small position. It ticks a lot of boxes: improving fundamentals, low gearing, and exposure to the tourism rebound. The yield is decent, and the risk profile is lower than many people think.

CapitaLand Integrated Commercial Trust: This is the bedrock of my Singapore REIT holdings. Not flashy, but highly liquid, well-supported, and diversified. If interest costs keep drifting lower, CICT will be one of the first REITs to reflect it in the DPU. I’m staying patient here—and the recent dip hasn’t shaken my conviction.

Now, where am I staying cautious?

US focused REITs like Manulife US REIT and KORE. I’ve been cautious about these for a while. The problem isn’t valuation—it’s the mismatch between their capital structure and their operating environment.

Their fate depends on US interest rates, US leasing demand, and USD debt refinancing—and none of those seem to be moving in the right direction.

The risks are high, the potential returns are high. At some point in time, every one of you needs to decide where you stand. I know where I stand – at most Satellite holdings, and capped exposure. 

Bottom line for my portfolio: I’m leaning into SGD-based, fundamentally strong REITs with resilient assets and manageable gearing. And I’m using this market weakness to review—not react.

Because while the rest of the market is panicking about Powell, I’m paying closer attention to what’s happening right here at home.

Alright, that’s all for today, folks. It’s all about quietly reading the signs—and investing with intention.

If you found this breakdown helpful, do me a favour—give this post a like, it really helps push it out to more dividend-focused investors.

And leave me a comment: Which REIT do you think benefits most from falling Singapore interest rates? Or if you’re still sitting on the sidelines, let me know what you’re watching for.

Until next time—stay steady, stay invested, and as always… don’t forget to read the map.