OUE REIT, SUNTEC REIT, KEPPEL REIT: WHICH ONE IS THE BEST?

Investing in real estate investment trusts (REITs) has long been a popular strategy for individuals seeking steady income streams without the hassle of directly managing properties. In Singapore, the REIT market is both mature and diverse, offering options spanning retail, industrial, logistics, and office sectors. Among these, office REITs have a unique appeal, particularly in a business hub like Singapore where office space demand is closely tied to economic activity and the performance of multinational corporations.

In this post, we will take an in-depth look at three office-focused REITs whose sponsors are highly reputable names: OUE REIT, Suntec REIT, and Keppel REIT. By examining their key metrics and fundamentals, we aim to provide insight into which of these REITs could be considered the “best” from an investor’s perspective.

Why Focus on Office REITs?

Office REITs own and manage commercial office properties, generating rental income primarily from businesses and corporations. Unlike retail or hospitality REITs, which can be highly susceptible to fluctuations in consumer spending or tourism trends, office REITs tend to have relatively stable cash flows, as long-term leases with corporate tenants are common.

Investors typically turn to office REITs for the following reasons:

1. Stable Income Stream: Office REITs often enjoy long-term leases with reputable tenants, which can translate into predictable rental income.
2. Capital Appreciation Potential: Prime office properties, particularly in central business districts (CBD), tend to appreciate over time.
3. Inflation Hedge: Rental contracts often include clauses to adjust rents in line with inflation, helping investors protect purchasing power.

However, office REITs are not without risks. Market oversupply, declining occupancy rates, and economic downturns can weigh heavily on performance. Therefore, careful evaluation of each REIT’s financial and operational metrics is crucial.

Key Metrics for Evaluation

When comparing REITs, several financial metrics can provide valuable insights into their attractiveness. For this analysis, we will focus on two core metrics:

1. Dividend Yield
   Dividend yield is the annual dividend expressed as a percentage of the REIT’s current price. Since REITs are primarily income-generating investments, many investors prioritize high dividend yields.
2. Price-to-Book (P/B) Ratio
   The P/B ratio compares the market price of a REIT to its book value per unit. A P/B ratio below 1 suggests the REIT is trading below its net asset value, potentially indicating undervaluation.

By combining these two metrics, we can create a simple yet effective measure of attractiveness: Attractiveness=Annual Dividend YieldPrice-to-Book Ratio\text{Attractiveness} = \frac{\text{Annual Dividend Yield}}{\text{Price-to-Book Ratio}}Attractiveness=Price-to-Book RatioAnnual Dividend Yield​

This metric balances income generation (via dividend yield) with valuation (via P/B ratio). A higher ratio suggests that the REIT offers both high yield and potential undervaluation.

The Contenders: Overview and Background

Before diving into the numbers, let’s briefly review the three REITs under consideration.

1. Keppel REIT

Sponsor: Keppel Corporation
Focus: Office properties in Singapore

Keppel REIT invests primarily in prime office properties located in Singapore’s central business district. Its portfolio includes landmark buildings like Marina Bay Financial Centre Tower 3 and other high-quality office spaces. The backing of Keppel Corporation, a leading conglomerate with interests in property development and infrastructure, adds credibility and stability.

2. OUE REIT

Sponsor: OUE Limited
Focus: Grade-A office properties

OUE REIT focuses on premium office properties in Singapore. Its portfolio includes notable assets such as OUE Bayfront and OUE Downtown. The REIT’s strategy is to maximize rental income through strategic tenant management and property enhancements. OUE REIT is recognized for its proactive asset management and efforts to maintain high occupancy rates.

3. Suntec REIT

Sponsor: Suntec Real Estate Investment Limited
Focus: Integrated office and retail properties

Suntec REIT is unique because it manages both office and retail components, although the office segment is dominant in revenue. Its flagship property is Suntec City, a mixed-use development in Marina Bay with offices, convention spaces, and retail outlets. Suntec REIT benefits from diversified cash flows across its property segments and strong sponsorship from a reputable real estate group.

Quantitative Comparison: Dividend Yield vs Price-to-Book Ratio

As of 19 September 2025, the key statistics for the three REITs are as follows:

Let’s interpret these numbers carefully:

Dividend Yield

• OUE REIT: Offers the highest dividend yield at 6.03%. For income-focused investors, this is immediately attractive.
• Keppel REIT: Provides a solid yield of 5.55%, slightly lower than OUE REIT but still above market averages for office REITs.
• Suntec REIT: At 4.81%, Suntec REIT’s dividend yield is the lowest among the three, though still respectable.

Price-to-Book Ratio

• Suntec REIT: The lowest P/B ratio at 0.597 suggests it may be undervalued relative to its net asset value.
• OUE REIT: P/B ratio of 0.613 is also below 1, signaling potential undervaluation.
• Keppel REIT: At 0.76, it is closest to book value but still under 1, indicating a modest discount.

Dividend Yield Over Price-to-Book

By dividing dividend yield by P/B ratio, we capture both income and valuation in a single metric:

• OUE REIT: 9.84% (highest)
• Suntec REIT: 8.06% (second)
• Keppel REIT: 7.30% (third)

Based on this simple quantitative measure, OUE REIT emerges as the most attractive REIT among the three, offering a strong combination of high yield and undervaluation. Suntec REIT follows closely, while Keppel REIT, although solid, ranks third.

Qualitative Considerations

While the numbers provide a useful snapshot, investors should also consider qualitative factors that can significantly impact long-term performance.

1. Portfolio Quality and Location

• OUE REIT: Focused on prime office properties in central locations. Its portfolio is relatively concentrated but consists of high-quality buildings likely to attract strong tenants.
• Suntec REIT: Benefits from a diversified portfolio with integrated retail and office components. This diversification can help smooth cash flows during economic fluctuations.
• Keppel REIT: Boasts premium-grade office properties with strong tenants, particularly in the CBD. Portfolio quality is excellent, though its concentration in office space can increase vulnerability to sector-specific downturns.

2. Sponsor Strength

• OUE Limited: Known for proactive asset management and strategic property development. Its sponsorship adds credibility, but the sponsor’s wider financial health should be monitored.
• Suntec REIT: Backed by a reputable real estate group, with extensive experience in managing integrated developments.
• Keppel Corporation: A highly respected conglomerate with deep pockets and diversified business interests, providing a strong safety net for its REIT.

3. Lease Structure and Occupancy

• OUE REIT: Maintains high occupancy rates and long lease terms, contributing to stable income.
• Suntec REIT: Office occupancy is solid, while retail components may experience cyclical fluctuations.
• Keppel REIT: Stable occupancy and long-term leases, particularly with multinational tenants, enhance predictability of rental income.

4. Market Trends and Risks

Office REITs are sensitive to economic cycles, remote work trends, and demand for office space.

• OUE REIT: Could benefit from Singapore’s sustained business growth and CBD demand.
• Suntec REIT: Diversification helps mitigate risks from office-specific downturns but exposes the REIT to retail sector fluctuations.
• Keppel REIT: Concentrated office exposure means higher sensitivity to changes in demand for commercial spaces.

A Holistic View: Which REIT is Best?

From a quantitative standpoint, the ranking is straightforward based on the Dividend Yield / P/B ratio metric:

1. OUE REIT – Highest combined yield and undervaluation, making it attractive for income-focused investors.
2. Suntec REIT – Slightly lower yield but good value, with the added benefit of portfolio diversification.
3. Keppel REIT – Still solid, but ranks third when combining yield and valuation metrics.

From a qualitative standpoint, the decision may vary based on investor priorities:

• If dividend income and undervaluation are the primary goals, OUE REIT is the clear choice.
• If portfolio diversification and exposure to both office and retail are important, Suntec REIT could be preferable.
• If sponsor strength and premium asset quality matter most, Keppel REIT offers reassurance due to its strong parent company and high-quality properties.

Conclusion

Choosing the “best” REIT depends on the lens through which you evaluate it. If your main criteria are high income and good value, OUE REIT clearly leads the pack as of September 2025. Suntec REIT offers a balance of yield and diversification, making it a strong contender. Keppel REIT, while slightly lower on yield relative to its P/B ratio, provides stability and confidence through its premium portfolio and reputable sponsor.

Investors should also consider long-term trends in office demand, the economic cycle, and potential risks associated with each REIT’s portfolio composition. By combining quantitative analysis with qualitative insights, investors can make informed decisions that align with their income, growth, and risk objectives.

In summary, while each REIT has its strengths, OUE REIT currently stands out as the most attractive choice for investors seeking a blend of high dividend yield and value for money.