Yes, interest rates are (very likely) going to be lowered, judging from the message given by the United States Federal Reserve last week. Soon, financial news and blogosphere were filled with questions like the blog title above, or something similar. It is natural for investors to ask such a question as REITs, or real estate investment trusts, are a leveraged asset class, and a fall in interest rates meant that cost of loans would go down, which subsequently increases distributions.
To answer the question, I would dish out the same old answer which I love to dispense; it depends. Ideally, a good time to buy REITs would be when they were at their lowest and/or weakest. Using the iEdge S-REIT Leaders Index, during the past five years, the two weak points were sometime in March 2020 (COVID-19) and October 2023 (accelerated interest rate growth). Granted that these were hindsight views and true bottoms are very hard to catch, but with sound fundamental analysis implemented (REIT financials, environmental factors and economic conditions), plus a bit of price action model at play, chances are higher of getting at least around the deemed bottom of the moment.
If you did not catch the bottom, rest assured; if you had vested earlier in the REITs in your portfolio, now is a good time to average up, provided that the current prices ticked off your valuation checklist, and there is a great potential that your selected REIT prices will rise. If you had not, however, and/or not that good in analysing REITs, then perhaps you can start off with REIT ETFs (exchange traded funds), which currently there are five listed in the local Singapore Exchange. As the REIT ETFs are, to a certain extent, seen as representatives of the asset class, making periodic entries into them (monthly, quarterly, half-yearly or yearly) would at least give you exposure, thus for this method, “any time to buy REITs is a good time”.
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