S&P tips tightening REIT cap rates

S&P tips tightening REIT cap rates
S&P tips tightening REIT cap rates

The ratings agency S&P forecasts real estate investment trusts should expect a slowing in the tightening of capitalisation rates despite more offshore capital investing in Australia.

S&P's outlook for property is in its report titled "Asia-Pacific REITs' Large Buffer Will Bear A Downturn". 

S&P analysts Craig Parker and Graeme Ferguson noted the spreads between bond yields and property capitalisation rates were at their widest historically.

It noted rents for Australian commercial property having seen "sluggish growth,"

But capital inflows looked set to continue this year for the REITs.

"The major commercial real estate markets of Australia, Hong Kong and Singapore are experiencing subdued rental growth, offset by substantial capital appreciation partly because of buoyant investment flows," they said.

Reit Capital Investing

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