Office REITs - DBS Research 2021-03-25: Return To Office Is Inevitable

Office REITs - DBS Research | SGinvestors.io KEPPEL REIT (SGX:K71U) MAPLETREE COMMERCIAL TRUST (SGX:N2IU) MANULIFE US REIT (SGX:BTOU) PRIME US REIT (SGX:OXMU)

Office REITs - Return To Office Is Inevitable

  • More major global companies no longer plan to downsize office space, a positive turning point for the office sector.
  • Most CEOs to encourage return to work at the office when vaccination rates exceed half the population; US, UK and Singapore leading in vaccination rates.
  • Remote working starting to take a toll on employees, which will speed up return to office.
  • Reiterate our positive stance on both Singapore Office (Keppel REIT (SGX:K71U), Mapletree Commercial Trust (SGX:N2IU)) and US Office S-REITs (Prime US REIT (SGX:OXMU), Manulife US REIT (SGX:BTOU)).



Major global companies no longer plan to downsize office space, a positive turning point for the office sector.

  • According to a survey by KPMG, most major global companies no longer plan to reduce their office space after the coronavirus pandemic, though few expect businesses to return to normal this year. Now, only 17% of CEOs plan to downsize office space, down from 69% in the Aug 2020 survey. We believe this is a good indication of a turning point for the office sector, to re-rate as vaccination rates start to rise and businesses return to normalcy.


To encourage return to work when vaccination rates exceed half the population; US and Singapore leading in vaccination rates.

  • KPMG highlighted that most chief executives said they will start to encourage staff to return to office when vaccination rates exceed half the population. The US/UK and Singapore are leading the vaccination rates among the largest global economies and Asia respectively. The vaccination rate per 100 population stands at 0.74 and 0.44 respectively, according to Our World in Data.


Recent positive news pointing to the return of office workers:

  • Microsoft has just announced that its HQ office will reopen. Workers will return to its suburban Seattle global headquarters at Redmond on 29 Mar (next week) as Washington state moved into Phase 3 of its COVID-19 reopening plan. There are more than 50k employees working in the Redmond campus.
  • Citigroup will institute “Zoom-Free Fridays” as employees are feeling ‘Zoom fatigue’. Remote working is starting to take a toll on employees, and this will likely speed up the return to office.
  • JP Morgan is leading the financial institutions by bringing back their hundreds of interns to the New York and London offices in the coming months while Citigroup will be inviting more workers to return in July and expect ~30% of the workforce to be back in the US office by summer. Citigroup’s Shanghai office has been back to normal at the office for many months as COVID cases have been under control in China.
  • Goldman Sachs calls remote working “an aberration that we are going to correct as quickly as possible”.
  • Singapore joins Wall Street in planning the return to office, as reported by Bloomberg yesterday. The Association of Banks in Singapore (ABS) and MAS conducted a study to develop a playbook for FIs in designing pandemic-resilient workplaces for the future as FIs engage more agile working and decentralisation / hub-and-spoke models.

Reiterate our positive stance on both Singapore Office and US Office S-REITs.






Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2021-03-25
SGX Stock Analyst Report BUY MAINTAIN BUY 1.400 SAME 1.400
BUY MAINTAIN BUY 2.250 SAME 2.250
BUY MAINTAIN BUY 0.900 SAME 0.900
BUY MAINTAIN BUY 1.000 SAME 1.000



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