The response of REITs returns to inflation and money supply in Singapore / Zurina Abdul Samad

The objective or purpose of this study is to determine whether there is significant relationship between inflation rate and money supply towards REIT returns. REIT is attractive to investors due to their unique characteristics such as high dividend yields, low correlation with common stocks, and a potential hedge against inflation and money supply. From the previous research indicate that the regression result for REIT returns is negatively correlated with the component rate of inflation. Therefore, equity and mortgage REIT investment may not offer a safe during inflationary period. From the previous research for money supply indicate that the regression result for REIT returns is positively correlated with the component rate of money supply. To analyze the REIT return this studies using 14 companies which have been listed in Stock Exchange of Singapore and involved in real estate investment. The time horizon is during 1996 to 2006 which is eleventh years and focused in Singapore case. Multiple regression analysis has been used in order to test the variables. The data that included in this study are REIT returns, inflation rate and money supply. The data was collected in monthly basis. This study found that there is a significant relationship between the inflation rate and money supply towards REIT returns.