It depends on your investment objective. If you want to tap the growth of real estate markets in countries like China or Australia, you can invest in SGX-listed SREITs with assets in these countries, apart from investing directly into those REITs listed in those countries’ stock exchanges.
Similarly, if you want to tap the growth of the US commercial real estate market, which is the largest and most diversified in the world, you can buy into the US Office REITs which are listed on the SGX-ST.
For an apple-to-apply comparison, let’s compare SGX-listed US Office REITs against US-listed Office REITs. Generally, US-listed REITs do not distribute 100% of its distributable income, and only distribute 50-60% (holding cash for their capex, growth etc). That translates to a yield of 3.5% to 4%. On top of that, you get 30% on your distributions.
On the other hand, SGX-listed US Office REITs (including Manulife US REIT) have to pay out 90-100% of its distributable income, providing a yield of 7% to 8%. And as long as you fill out your W8 tax form, there is no 30% withholding tax on your distributions.
Hence, SGX-listed US Office REITs with overseas/US assets offers the best of both worlds, as they allow Singapore investors to tap the growth of the overseas/US real estate market which is much bigger than the Singapore real estate market, yet there is assurance of the SGX-listed Office REITs paying out 90-100% of its distributable income to unitholders.
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