SINGAPORE (Mar 28): CGS-CIMB Securities is maintaining its “overweight” on property developers given higher possibility of unlocking value from older commercial assets.

This follows the release of URA's Draft Master Plan 2019 on Wednesday which envisions a more sustainable and liveable city state of the future.

Key strategies in the draft include broadening developments across the eastern, western and northern parts of the island to tap global gateway connections as well as increasing capacity at Paya Lebar Air Base and Greater Southern Waterfront.

The CBD will also be repositioned as a 24/7 mixed-use district for residents to work, live and play. Development density will be raised to 25-30% to encourage the conversion of older offices into mixed-use projects with homes, hotels and lifestyle options, particularly along Anson Rd, Robinson Rd, Cecil St, Shenton Way and Tanjong Pagar.

Development density for selected parts of the Orchard area -- such as the Ngee Ann City, Lucky Plaza and Tang Plaza stretch -- have also been raised. This should encourage property owners to explore redevelopment or asset enhancement as part of a broader approach to rejuvenate the shopping belt area, says CGS-CIMB.

Development intensity for commercial land in selected areas will also be raised. The plot ratio for the area near Raffles Place MRT Station has been increased to 15x from 12.6x. Again, the possibility of higher value-creation will unlock underlying value of properties and encourage redevelopment of older buildings such as The Arcade and Clifford Centre.

“Our top picks are CapitaLand, CityDev and UOL,” says analyst Lock Mun Yee in a report where CGS-CIMB has set target prices of $3.56, $10.66 and $8.45 respectively.

As at 11.53am, CapitaLand, CityDev and UOL ate trading at $3.55, $8.93 and $6.87 respectively with FY21F P/BV of 0.71, 0.78 and 0.55 respectively.