SINGAPORE (Dec 7): UOB KayHian is putting its “overweight” call for Singapore’s property sector under reviewing given the tapering of 1H19 GLS residential supply to prevent a glut.

<a href="https://www.theedgesingapore.com/singapore-slow-residential-land-sales-curbs-crimp-demand" target="_blank">Singapore to slow residential land sales as curbs crimp demand</a>

“We like developers with higher proportions of recurring earnings streams such as CapitaLand (88% in 9M18) and Ho Bee Land (98% in FY17),” says UOB analyst Loke Pei Hao as her key picks.

UOB has a target prices of $3.23 and $2.41 for <strong>CapitaLand</strong> and <strong>Ho Bee Land</strong>.

To recap, 1H19 GLS (government land sales) programme saw residential supply moderated to 6,475 units. UOB says this is the lowest level since the 5,475 units of 1H07.

The 1H19 confirmed list of 2,025 units versus 2,705 units in 2H18 is 25% h-o-h lower. Similar to previous GLS Programmes, the bulk of the residential supply by units are concentrated in the mass (48%) and mid-market segments (47%).

According to Loke, the government considered the significant supply pipeline which has risen to 45,000 units as well as the existing 28,000 vacant private units.

The government also factored in the moderation in developers’ demand and the declining overall transaction volumes, after implementation of the latest cooling measures in July.

According to UOB, private residential unsold inventory has built up to 39,772 units in 3Q18, which is the highest level since 2Q13 with 40,899 units.

However, things are different for the hospitality property sector. Even with the new hotel site at Sims Avenue with 575 rooms and the existing white site Marina View with 540 rooms can add about 1,115 rooms.

This represents only 1.7% of the existing stock at the end of 2017, and will only hit the market in 3-4 years’ time, says UOB.

“We believe the recent re-introduction of new hotel sites since 2H18 ... signals government’s consensus with our view on the supply shortage becoming acute in the coming years, amid strong visitor arrival growth,” says Loke.

For 9M18, visitor arrivals has surged 7.5% y-o-y, and is on track for another record year. Last year saw visitor arrivals at a historic high of 17.4 million, up 6.2% y-o-y while tourism receipts rose by 3.9% to $26.8 billion.

As at 2.37pm, shares in CapitaLand are trading at $3.22 or 15.3 times forward earnings while shares in Ho Bee Land are trading at $2.41 or 11.3 times forward earnings.

https://s3-ap-southeast-1.amazonaws.com/tesuploads/PC+Lee/property%20stokes.png

Singapore's property sector 'overweight' under review by UOB on tapering residential supply

DPM Lawrence Wong appointed as GIC’s deputy chairman

Will the Rising Sun keep rising?

Fed signals higher-for-longer rates with hikes almost finished

EQT Impact Challenge offers platform for impact entrepreneurs to attain 'patient capital'

Singapore's property sector 'overweight' under review by UOB on tapering residential supply

Related News

Highlights

DPM Lawrence Wong appointed as GIC’s deputy chairman

Related News

Ho Bee Land issues profit warning, citing need to book fair value loss on London investments

CapitaLand's $1.37 bil 'Geneo' redevelopment to help rejuvenate 40-year-old Singapore Science Park

Ho Bee Land triggers SGX query after shares surge by 17.2%