Analysts at DBS Bank noted that renewed investor interest in upscale shopping malls along Orchard Road is a positive development for Singapore-listed real estate investment trusts (S-REITs). They stated, "With retail-focused REITs trading below book value, current trading levels undervalue premium central shopping malls."

The analysts identified CapitaLand Integrated Commercial Trust (CICT) and Lendlease Global Commercial REIT as their top picks among S-REITs with central exposure, assigning both a "buy" rating with target prices above their current levels. CICT's target price was set at S$2.30, higher than its current price of S$2.08, while Lendlease Global REIT's target price was S$0.75, up from its current S$0.50.

Given Lendlease Global REIT's current price-to-book ratio of 0.66 times, the analysts suggested it could be a potential candidate for privatization by its sponsor or attract third-party interest if its valuation remains at this level. They added, "We believe its Singapore-centric profile and quality asset portfolio should appeal to investors looking to enter the Singapore retail sector."

Meanwhile, Wong and Tan highlighted CICT's "superior" retail yield of 9.5% from its central assets, stating, "This yield remains higher than its peers, solidifying CICT’s position as our top pick for central retail exposure in the Singapore REIT sector."

The analysts also pointed to the landmark sale of a 50% stake in Ion Orchard and the privatization offer for Paragon REIT as indicators of heightened investor confidence in Singapore’s prime retail assets. The S$1.85 billion sale of Ion Orchard translates to a price of S$5,928 per square foot, described as "a record high for a top-tier retail mall." The privatization offer for Paragon REIT implies a price of approximately S$4,500 per square foot for its anchor asset, Paragon Shopping Centre, with a yield of 5.2%.

They noted, "The privatization offer of S$0.98 per share in cash by Paragon REIT’s sponsor and manager corresponds to a price-to-book ratio of about 1.07 times, consistent with past privatization or M&A offers in the REIT sector." They added, "Once the privatization offer is successfully completed, these two landmark transactions will further consolidate ownership of Orchard Road malls, enhancing their scarcity value and long-term investment appeal."

With the resurgence of luxury consumption, the analysts anticipate a potential recovery in rental rates in the near future.