Property − Singapore - UOB Kay Hian 2019-11-19: Strength Beneath The Headlines

Property − Singapore - UOB Kay Hian Research | SGinvestors.io CITY DEVELOPMENTS LIMITED (SGX:C09) PROPNEX LIMITED (SGX:OYY)

Property − Singapore - Strength Beneath The Headlines

  • Oct 19 URA private new sales showed another month of strength (+85% y-o-y), although this appears weak on a m-o-m comparison (due to fewer RCR launches). Some of the more attractively-priced previously-launched properties continue to see buying-interest return, such as Parc Esta (92 sold). As a Nov 19 pre-cursor, we also saw SengKang Grand setting a new S$1,700psf benchmark (32% cumulative sales) during its launch weekend.
  • Maintain MARKET WEIGHT with CITY DEVELOPMENTS (SGX:C09) and PROPNEX (SGX:OYY) as our top picks.



WHAT’S NEW

  • URA Oct 19 monthly private new sales indicate that a total of 928 units (-27% m-o-m, +85% y-o-y) were sold (excluding ECs).


ACTION


Signs of resilience.

  • While Oct 19 new sales was down 27% m-o-m, it is still relatively healthy on a y-o-y basis (ie reflecting a 85% increase). We also note that Oct 18 is a low base, dragged by the subdued sentiment post-Jul 18 cooling measures.


ESSENTIALS


Lack of major RCR (Rest of Central Region) launches to blame for slower m-o-m sales (-27%).

  • Oct 19 saw only four new launches, which brought a total 1,155 units to market (vs five launches totalling 1,847 units in Sep 19). With exception of Midwood (564 units), the remainder, Royalgreen (285 units), Midtown Bay (219 units) and Neu at Novena (87 units) are all located in the Core Central Region (CCR).
  • Given the lack of major Rest of Central Region (RCR) launches (and bulk of demand are still in such projects, due to relative affordability), Oct 19 sales transactions came in relatively subdued (vs Sep 19).

Parc Esta (92 sold) tops as the best-selling project in Oct 19

  • Parc Esta (92 sold) tops as the best-selling project in Oct 19, followed by Treasures At Tampines (88 sold), Neu At Novena (54 sold), Parc Botannia (49 sold), and Midtown Bay (48 sold). We see a new wave of buying interest returning to some of the more attractively-priced previous-launched properties.
  • Notably, Parc Esta has seen a pick-up in sales volume (92 sold/7% inventory), as compared with its average monthly sales (c.44 units/3% inventory) between Jan-Sep 19. We believe that buyers are attracted to its value-for-money (which has been priced lower due to cooling measures), convenient location (minutess from Eunos MRT), and top-quality furnishings (eg Italian marble flooring). With a strong sales record (62% sold at end-Oct 19), Parc Esta has also revised prices marginally upwards since 17 Nov 19 as indicated by our channel checks.

Pre-cursor to a strong Nov 19; SengKang Grand sets a new benchmark pricing S$1,700 ASP.

  • During its launch weekend (2-3 Nov 19), SengKang Grand achieved stellar 32% take-up (216 of the total 680 units). Located in D19, the project is an integrated development, sitting atop a transport hub and direct access to a line up of retail offerings at the mall and other amenities, and jointly developed by CAPITALAND (SGX:C31) and CITY DEVELOPMENTS (SGX:C09). We expect its strong success to trigger a return of buying interest to nearby OXLEY (SGX:5UX)’s Riverfront Residences (Oct 19 median pricing: S$1,337psf/ 80% sold), which is more attractively priced. Another beneficiary may be SINGAPORE PRESS HOLDINGS (SGX:T39)-Kaijima’s Woodleigh Residences (Oct 19 median pricing: S$1,864psf/ 24% sold), which is also an integrated development located four MRT stops away on the North-East line, but closer to the city.
  • Upcoming launches to look out for in coming weeks include Dairy Farm Residences (460 units), The Avenir (376 units), and Urban Treasures (237 units).





Adrian Loh UOB Kay Hian Research | Loke Peihao UOB Kay Hian | https://research.uobkayhian.com/ 2019-11-19
SGX Stock Analyst Report BUY MAINTAIN BUY 12.000 SAME 12.000
BUY MAINTAIN BUY 0.620 SAME 0.620



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