Singapore Property Sector - DBS Research 2016-06-16: Volumes basing out

CAPITALAND LIMITED C31.SI CITY DEVELOPMENTS LIMITED C09.SI UOL GROUP LIMITED U14.SI

Singapore Property Sector - Volumes basing out

New launches (Gem & Stars of Kovan) boosted May sales
YTD launches and sales were flat
Interesting datapoint on upcoming Lake Grande
Expect property price to decline at a slower pace due to stable sales and low supply of land

May16 residential sales increased 8% y-o-y to 1,388 units. Once again, new property launches (Gem Residences & Stars of Kovan) boosted May 2016 sales of private homes by 64% y- o-y to 1,056 units.
Gem Residences launched all 578 units and sold half during the month.
Stars of Kovan launched 180 units out of total of 395 units and sold half.
Excluding these projects, sales and launches rose 4% y-o-y and 17% y- o-y respectively.
Sales for existing projects remain strong, i.e. Poiz continues to record top 5 sales in the month, selling 47 units (recorded take-up rates of 85%).
There were no new executive condominiums (ECs) launched this month but sales volume remained strong, +58% y-o-y. YTD residential sales rose 27% y-o-y to 4,915 units led by sales in ECs (+147%).
Private residential sales were flat y-o-y at 3,267 units.

RCR continues to record strong sales volume (6x higher than sales in May 2015) during the month, mainly due to the two new launches. Sales volume in OCR increased 37% y-o-y while CCR fell 14%. YTD sales were mostly driven by properties sold in CCR and RCR.

Upcoming launches – Lake Grande in the Jurong Lake district would be another key project to gauge the buyer’s sentiment in OCR.

YTD sales volume appears to have stabilised. With the government keeping land supply low, we believe the property prices will decline at a slower pace. A potential positive catalyst that could re- rate the sector is the relaxation of property policies.
We expect Singapore developers to continue diversifying their earnings base by expanding their geographic reach and focus on growing their commercial portfolios in order to build a recurring income base.
We like developers with diversified and multiple income streams that will enable them to remain resilient in the current down-cycle. Picks are CAPL, City Dev, UOL Group.

*CCR: Core Central Region
*RCR: Rest of Central Region
*OCR: Outside Central Region

Rachel Lih Rui TAN DBS Vickers | Derek TAN DBS Vickers | http://www.dbsvickers.com/ 2016-06-16

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