Keppel Real Estate Investment Trust and Mapletree Industrial Trust appear most compelling in the Singapore REIT sector, says Morningstar analyst Xavier Lee.

Office-focused Keppel REIT is likely to benefit from the tightening Singapore office market, Lee says in a research report.

He expects office rental rates to accelerate in 2027 as central business district vacancy narrows.

Meanwhile, Mapletree Industrial is poised to benefit from artificial intelligence-driven demand, given data centers are a large part of its overall portfolio.

Keppel REIT and Mapletree Industrial trade at attractive distribution yields of 5.5% and 6.4%, respectively, he adds.

Morningstar pegs its fair-value estimates for Keppel REIT at S$1.10 and for Mapletree Industrial at S$2.20.

Keppel REIT units rise 0.5% to S$0.985 while Mapletree Industrial gains 0.5% to S$2.09.