Friday, August 17, 2012

Singapore Property

Business Times: Fri, Aug 17
Maybank Kim Eng Research, Aug 16

DEVELOPERS sold 1,943 new homes (2,067 including executive condominium units) in July, marking a remarkable rebound from two consecutive months of declining sales, according to the latest figures from the Urban Redevelopment Authority (URA). This brings seven-month 2012 total new home sales to 14,197 units (16,776 including ECs), setting the tone for 2012 to be a record year. Barring another round of cooling measures, we now expect new home sales to hit the 20,000-unit mark for the full year.

Mass market projects, particularly those in Punggol and Tampines / Pasir Ris, garnered the strongest buying interest. Parc Centros at Punggol Central developed by Wee Hur was the best-seller, with 492 units sold at a median average selling price (ASP) of $924 per square foot (psf). This was followed by Parc Olympia at Flora Drive by Koh Brothers, which sold 204 units at a median ASP of $874 psf.

A top-selling project that stood out was V on Shenton, which is the redevelopment of UIC Building on Shenton Way. Of the 190 units launched, 144 were sold, achieving a median price of $2,061 psf. Forty-three per cent of the units are 732 sq ft or smaller, with investors presumably attracted by the "live, work and play" environment.

Only eight units with ASPs of more than $3,000 psf were sold in July, comprising three units each at Hilltops and The Scotts Tower, and one unit each at The Laurels and The Orchard Residences. The unit at The Orchard Residences achieved the highest price at $4,381 psf, followed by one of the units at Hilltops which achieved $3,971 psf. Sales may be sluggish, but prices continue to show little signs of easing.

One possible explanation for July's strong sales is that several developers timed their project launches ahead of the Hungry Ghost Month, which begins on Aug 17. For the rest of the year, we expect potential homebuyers and investors to stay increasingly on the sidelines, especially when economic confidence continues to wane, and serious buyers turning increasingly to the secondary market for better bargains. With monthly sales likely to average 1,000-1,200 units per month for the rest of the year, we estimate full-year new home sales to be around 20,000 units.

We believe that if sales volumes remain at elevated levels, the government is likely to introduce more cooling measures to moderate buyers' exuberance, particularly when economic headwinds persist or even mount. If the buying dries up significantly, the unsold inventory of 40,000 units may pose a problem in future. We continue to prefer CapitaMalls Asia ("buy"; TP: $2.09) for its retail mall exposure, and CapitaLand ("buy"; TP: $4.12) and Keppel Land ("buy"; TP: $4.04) for their diversified portfolios.

-        by KENNETH LIM


Ebit - earnings before interest and tax
Ebitda - earnings before interest, tax, depreciation and amortisation
EPS - earnings per share
FY - fiscal/financial year
H1, H2 - first or second half
NAV - net asset value
9M - nine months
P/B - price/book value (ratio)
PE - price/earnings (ratio)
Q1, Q2, Q3 - first, second, or third quarter
q-o-q - quarter-on-quarter
RNAV - revised net asset value
ROE - return on equity
TP - target price
y-o-y - year-on-year

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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