[Listen on Spotify and YouTube too!]

Hey there, fellow REIT investors! You know, I’ve been saying this for a while now… The Singapore REIT market has been quietly stabilizing. Local interest rates have dropped. Some REITs are even raising their DPUs. It’s like laying the foundations for a comeback.

But despite all that, there’s been one giant missing puzzle piece. One thing holding back a full REIT recovery.

The U.S. Federal Reserve.

Because like it or not, the REIT market is global. And as long as the Fed keeps interest rates high, global bond yields stay elevated, and institutional investors hesitate. I call it my “Fear Index” for REITs — the U.S. 10-year Treasury yield. And it’s been stubbornly high… until recently.

Now here’s what’s got me watching closely: The U.S. 10-year yield has started to drop. At the same time, more and more Fed officials are signaling that rate cuts could be coming — soon. Maybe even by July. Some of this may be political pressure — with Trump already talking about replacing the Fed Chair if rates are not cut. But whatever the reason, the writing is appearing on the wall. 

It’s like our classic breakfast set — kaya toast, soft-boiled eggs, and that strong, aromatic kopi. For the longest time, the kopi was missing. We had the toast, we had the eggs, but no caffeine kick. Now? The coffeeshop auntie is finally bringing over that piping hot kopi. And once it lands on the table — that’s when the whole set comes alive.

So is this it? Are we finally at the turning point? 

I want to piece everything together — the falling yields, the market’s skeptical reaction, and what I’m doing to my cash position. Many analysts and YouTubers are already shouting for the start of a REIT upturn, but should you rush in right now? Let’s explore all these in today’s post. 

But 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!

Foundation for Gains: Pieces Already In Place

Let’s remind ourselves — even before this drop in U.S. Treasury yields, Singapore interest rates had already started falling.

The 1-year Singapore T-bill yield has dipped to a 2-year low. And the 3-month SORA, which many REITs use to benchmark their debt, is trending lower too. That’s already helping many Singapore-focused REITs. We’re seeing borrowing costs stabilizing, even declining slightly for some.

You know what that means: less pressure on interest expense, more room for DPUs to rise. We’re not talking explosive growth, but after 2 years of pain? Even a small bump is very welcome, and could represent more goodies on the way.

REITs like CapitaLand Integrated Commercial Trust, Frasers Centrepoint Trust and CapitaLand Ascendas REIT are already showing signs of resilience. The yield spreads are widening again — in a good way this time — and institutional investors are starting to nibble. Just look at the CSOP iEdge S-REIT Leaders Index ETF. It’s up 5% in the past month. Not wild, not euphoric, but definitely a shift.

But here’s the key: this is happening before the Fed even cuts rates.

So if local REITs are already starting to recover now, imagine what could happen if the Fed gives the green light — a proper rate cut.

US Fed Rate Cuts – Why It’s On The Way

Now let’s talk about the big piece that’s finally falling into place — the U.S. Federal Reserve. For the longest time, while Singapore’s interest rates were already falling, the Fed held back. Powell and team insisted on keeping rates high, waiting for inflation to behave itself. And while some other central banks have already started cutting, the U.S. stayed on the sidelines.

But now… things are shifting.

One by one, the signs are showing up.

Just a few weeks ago, Fed Governor Christopher Waller — usually more on the cautious side — said if inflation continues on its current path, a rate cut could come as early as July. Vice Chair Michelle Bowman, says she’s open to a July cut too, if inflation stays tame. Even Raphael Bostic, who’s been quite conservative, admitted a cut later this year seems increasingly appropriate.

This is big. It’s like the dominoes are lining up. While Chairman Powell is still holding the official line — “We’re watching the data carefully, no rush” — you can feel the tone shifting. The Fed may not be screaming “rate cuts!” just yet… but they’re definitely clearing their throats.

And when even the traditionally hawkish folks are hinting at cuts, the market listens — because this could finally be the moment we’ve been waiting for.

And here’s the part that I watch most closely — my personal “Fear Index” for REITs — the U.S. 10-year Treasury yield. After staying stubbornly high, it’s finally coming down. Over the past month, it has dropped from a worrisome 4.6% to below 4.3% currently. That’s huge. Because this yield anchors everything from borrowing costs to risk sentiment. If this downtrend continues, it sends a strong message: the Fed pivot may actually be real this time.

And here’s why I’m cautiously optimistic.

We’ve seen this story play out before — not once, not twice, but three times over the past few years. Each time the market sensed a Fed pivot, REITs exploded upwards. We’re talking gains of 10%, even 20%, in just weeks. But the rallies didn’t last — because the Fed didn’t follow through. No actual cuts, and prices collapsed back down. Investors got burned.

That’s why there’s so much skepticism now. But to me, those past spikes weren’t flukes — they were a preview of the upside potential. And this time, we already have falling Singapore rates, improving fundamentals, and now, a U.S. Fed that might finally blink.

So here’s what I’m doing about it…

What This Means For REITs

Having set the stage for what has happened so far, and where I think we might be headed, now to answer the most important question for me and you: what does all this mean for our long-suffering REITs?

Finally, Fear Index for REITs is cooling down

Well, remember how I’ve always said that the US 10-year Treasury yield is my Fear Index for REITs? That’s because it’s the benchmark rate that drives global cost of capital. When it spikes, REITs get crushed. When it falls, REITs breathe again.

The 10-year Treasury yield dropped below 4.3% in recent weeks, down 0.3% points over just one month. That’s a meaningful move, but enough to turn heads. If the Fed confirms a cut in July or even later this year, that’s rocket fuel for REIT valuations.

Here’s why: lower interest rates reduce borrowing costs, increase DPU stability, and more importantly — they lower the yield spread barrier. 

History Indicates Caution

We’ve been here before — and yes, some of us got burnt, me included! Three times over the past two years. But just when investors got excited… the Fed came out, poured cold water on rate cut hopes, and everything pulled back.

So Why Is This Time Different?

Because this time, something has actually changed.

Back then, rate cut expectations were driving the rally. But the reality was… there were no cuts. Inflation data was still sticky, and the Fed kept saying “not yet.” Now, that tide is turning. Many central banks — Canada, the UK, the ECB — have already started cutting. Global monetary policy is shifting. 

But the big one — the one that really moves the needle — is the United States. The Fed is the last major central bank holding out. And now, it finally looks like it’s ready to pivot.

That tells me the potential is real this time.

Before we move on, if you’ve found the post useful so far, please take a moment to give it a “like”, and subscribe to the channel so you won’t miss any updates on my views and my portfolio movements. 

Alright, let’s go! 

But Guys, There’s No Need To Rush

Because if — and I stress if — the Fed actually pulls the trigger on a rate cut, we may finally see a sustained REIT rally, not just a short-term bounce. REITs aren’t like tech stocks — they don’t need explosive growth, they just need stability. And falling interest rates are the fuel for that.

That’s why I’m activating more of my cash — but, this is the important part, I’m not going all in at once. 

Why? Because while the REIT market has been climbing in anticipation of rate cuts, the actual cuts might still take time. Just this week, strong U.S. labour market data on 3 July suddenly dashed hopes of a July cut – probability of a rate cut in July dropped from 24% to 6.7%. The REITs reacted and declined the very next day. 

For most of us who already hold a core REIT allocation, there’s no need to rush. Top up gradually through dollar-cost averaging — but perhaps with a bit more conviction each time.

Just keep in mind the broader risks still hanging over the markets — stretched valuations, geopolitical tensions, tariff uncertainties… they haven’t gone away as well. While REITs may be recovering, remember that the price trend is unlikely to be a straight line up. 

The Dividend Uncle’s Take

Now that the environment is shifting — and for real this time, I believe — there are different ways to position yourself for the potential REIT recovery. Depending on your investing style, there’s something for everyone. And I’ve done it all before. 

1) The easiest and most obvious way? Get broad-based exposure to REITs. I’ve done this through Syfe REIT+, which gives me a diversified base across all the major REITs in Singapore. I explained why I chose this over traditional REIT ETFs in a previous post, so check that out if you haven’t yet.

2) Next level up — my Core REITs portfolio. These are solid names that represent the major sectors — retail, industrial, healthcare, hospitality. For me, that’s CapitaLand Integrated Commercial Trust, Mapletree Industrial Trust, Parkway Life, and CapitaLand Ascott Trust. They’re resilient, diversified, and they’ll ride the wave if the broader REITs market turns.

3) And then there’s the third layer — the higher beta plays. These are more sensitive to interest rate changes, and can move faster — both up and down. Think names with higher gearing, more floating rate debt, or refinancing windows coming up soon. One that I’ve been watching is CDL Hospitality Trust, which could benefit sharply from the right tailwinds.

Of course, this last group requires more care. I’ll be reviewing and sharing some of these REITs I’m buying or eyeing in upcoming posts — so keep a lookout as this Uncle ride the wave with a little more risk and potential returns.

So here we are. The final piece of the puzzle may finally be falling into place. After years of false starts, rising rates, and dashed hopes… the US Fed might actually be ready to cut.

Now I’m not saying we throw caution to the wind — but when the conditions start aligning, long-term investors need to sit up and pay attention. Because moments like these? They don’t shout. They whisper. And it may make sense to start getting back in.

I’ve positioned myself through Syfe REIT+, through my core REITs — and I’m watching closely. Because if this really is the start of the real REITs recovery… I want to be on the right side of history.

Thanks for watching, and if you found this post helpful, do give it a like, share it with a fellow investor, and subscribe if you haven’t already. Let’s ride this cycle the smart way — together.