OREANDA-NEWS. The six Singapore-listed office-sector real estate investment trusts' (office SREITs) earnings growth is likely to slow in 2016, Fitch Ratings says in a new report. However, the agency says the credit profiles of most of the office SREITs are strong, which should help to absorb the impact without any major credit implications.

We expect the sector's rental reversions to stay marginally positive in 2016, despite the pressure on Singapore office rents. This is because the office SREITs' exposure is limited, with 20% of leases due for renewal in 2016, and because renewing leases were contracted about six years ago on average when rents were considerably lower.

Rents in Singapore's central region fell by 3% and 6% in 3Q15 and 4Q15 due to a generally slower economic environment, and a weak services sector in particular. Rents should continue to fall through 2016 because demand is likely to remain weak, while new office space could increase by up to 7%.

Fitch expects office vacancy rates to rise in 2016, because of the increase in new supply amid weak demand. The sector's credit fundamentals are strong with long-term revenue visibility of six years on average, low leverage and robust funds flow from operations interest cover.