Singapore Property - DBS Research 2016-01-18: Tough times persists

CAPITALAND LIMITED C31.SI CITY DEVELOPMENTS LIMITED C09.SI FRASERS CENTREPOINT LIMITED TQ5.SI

Singapore Property - Tough times persists

Dec 15 was a relatively quiet month for residential property launches and sales.
FY15 residential property launches +8%YoY while sales +13%YoY mainly led by EC. Private units launched -6%YoY and sales +3%YoY.
FCL won Siglap Land bid on a tightest winning margin since 2015.
2016 volumes to remain low. Top picks: CAPL, City Dev

Residential property launched fell 76% YoY in Dec 15 to 173 units mainly because no EC units were launched in the month (private: +226%). However, sales grew 25%YoY to 508 units, led by 67%YoY increase in private units sold.
New launches in Dec-15 were small (ranged from 1 to 50 units). POIZ Residences recorded highest sales for 2 consecutive months since its launch in Nov15 and achieved take up rates of 95% (Nov 15: 79%). Developments recorded top sales in the month include Sky Vue (20 units), The Brownstone (20 units) and Botanique at Bartley (17 units).
For FY15, units launched grew by 8% (11.0k units) while units sold grew 13% (10.4k units), mainly led by EC.
Private units launched fell 6%YoY and sales grew marginally (+3%YoY).
Sales in the core region fell 30% (CCR -53%YoY; RCR -21%YoY), mitigated by 40%YoY increase in OCR sales.

FCL won Siglap Land bid over 7 other bids at S$624.2m (S$858psf PPR) on a tightest winning margin since 2015 at 4% of 2nd highest bid and 7% of the median bid.
We believe the bid prices seen are fairly bullish given the unique characteristic of the site (seafront and next to upcoming Siglap MRT) and the low landbank inventory amongst the developers. This may incite potential en-bloc of existing nearby projects, which had previously failed.

With ongoing tight policy measures in place, we believe that the residential transaction volume is likely to remain at 8,000-8,500 levels, with developers likely to remain quiet and expect developers to clear existing inventories.
Land-banking opportunities in Singapore remain limited and we expect most developers to continue to seek higher returns through investing overseas or grow recurring income base.
Picks CAPL, City Dev , FCL.

Derek Tan DBS Vickers | Mervin Song CFA DBS Vickers | http://www.dbsvickers.com/ 2016-01-18

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