Singapore Property Sector - DBS Research 2016-03-16: Dull Feb with a glimmer of hope from new launches

Singapore Property Sector - DBS Research 2016-03-16: Dull Feb with a glimmer of hope from new launches CAPITALAND LIMITED C31.SI  CITY DEVELOPMENTS LIMITED C09.SI  FRASERS CENTREPOINT LIMITED TQ5.SI 

Singapore Property Sector - Dull Feb with a glimmer of hope from new launches 

  • Another quiet month in Feb; sales volume -23% y-o-y 
  • YTD sales in OCR +5% y-o-y vs central region's -41% 
  • Strong interests on Cairnhill Nine, Wisteria and Wandervale 
  • Potential pickup in volume on attractive prices 

Another quiet month in Feb. 

  • February remained another quiet month with a 23% y-o-y drop in new private residential units sold to 301 transactions (430 units including executive condominiums). 
  • Given the lack of new property launches, developers focused on marketing existing unsold stock. 
  • Projects like The Panorama and Kingsford Waterbay each sold 18 units (recording take-up rates of more than 90%), followed by Principal Garden (16 units; take-up rate 72%), while Poiz Residences and Kingsford Hillview Peak sold 16 units each (97% and 54% respectively). 
  • The executive condominium (EC) segment saw steady sales momentum, selling 129 units in Feb-16 (vs 156 units in Jan- 16), with The Terrace and The Vales selling 23 units and 17 units and recorded take-up rates of 47% and 37% respectively. 

YTD sales in OCR +5% y-o-y. 

  • Sales volume in OCR region grew 5% y-o-y while central region fell 41% y-o-y largely due to RCR. However, on m-o-m, sales volume in OCR fell 13% (or 49 units) while volumes in the CCR and RCR regions remained relatively stable. 

Properties continue to sell if priced attractively. 

  • The debuts of new properties; namely Capitaland’s Cairnhill Nine, Northern Resi’s Wisteria and Sim Lian’s Wandervale (EC) have received strong interests, a positive indication amidst a weak property market. 
  • According to news reports, the properties recorded 67%, 84% and 50% sales respectively during their recent launches. The properties were priced at attractive levels, approximately 6-13% below latest comparable transactions. 
  • Apart from local interests, 50% of the buyers were foreigners, mostly from Indonesia. 

Potential pickup in volume on attractive prices. 

  • The recent launches showed some signs of improvement in buyer sentiment but we do not believe it to signal a turnaround in the expected downtrend in prices in the medium term. 
  • While we remain cautious, volume may increase if projects are priced attractively. 
  • A potential positive catalyst that could rerate the sector is the relaxation of property policies. 
  • Picks: CAPL, City Dev, Frasers Centrepoint Limited.

Derek Tan DBS Vickers | Singapore Research Team DBS Vickers | http://www.dbsvickers.com/ 2016-03-16
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