CGS-CIMB Research analyst Lock Mun Yee believes Singapore property developer valuations are still inexpensive, prompting her to reiterate her ‘overweight’ rating for the property sector in an April 15 research note.

Her rating comes as March monthly home sales came in at 1,373 units. Excluding executive condominiums (EC), sales came in at 1,296 units, surging 96% y-o-y and doubling m-o-m.

She attributes the better sales to new project launches including Midtown Modern, which made up 28% of total monthly sales. Other top-selling projects include Treasure at Tampines, Amber Park and Ki Residences at Brookvale.

42% of the monthly volume transactions comprised of Core Central Region (CCR) projects, followed by city-fringe (30%), and suburban projects (28%).


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The private resale market also saw robust activity, with transactions in the first three months of 2021 totalling 3,550 units. This represents a 57% jump y-o-y and accounted for 36% - 39% of Lock’s full-year expectation of 9,000-10,000 units.

Lock also cites data from Singapore Real Estate Exchange (SRX) indicating that the resale market remained active with 1,662 units changing hands in March, up 28.9% m-o-m and 122.5% y-o-y, led by active transaction volumes in the Outside Central Region.

“We believe the demand was underpinned by the still-low interest rate environment, a measure of pent-up demand, and wealth creation from a robust stock market,” she explains.

Looking ahead, Lock expects private home prices to by 0% - 5% in 2021 due to robust demand and in-line with economic recovery.


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Lock believes that valuations for Singapore developers are still inexpensive, noting that developers are trading at a 45% discount to RNAV, close to one standard-deviation below long-term mean discount.

“We prefer developers with a high recurring cashflow base and a strong balance sheet that would enable them to tap into any opportunities during this slower cycle,” she says.

To that end, her top picks are UOL Group, City Developments and CapitaLand. The counters are all rater ‘add’ with target prices of $7.91, $8.97 and $4.04 respectively.

As at 3.51pm, shares in UOL, City Developments and CapitaLand are trading at $7.85, $8.04 and $3.76 respectively.