CapitaLand and City Developments (CDL) are DBS Group Research's top picks among property developers, despite the headwinds caused by the novel coronavirus (Covid-19) pandemic.

This is because their attractive valuations are making them too cheap to ignore, according to the brokerage.

DBS believes that most negatives are priced in at an average price to net asset value of 0.6 time, which is close to levels back in the global financial crisis (GFC).

“We like [the] risk-reward ratios at current levels and believe that implied valuations have priced in a 10-15% portfolio deterioration in asset prices, a scenario which is unlikely given low interest rates and the low yield environment,” DBS analysts Derek Tan and Rachel Tan write in a note dated Aug 6.

DBS adds that CapitaLand’s and CDL’s balance sheets are well-capitalised.

This positions them as buyers rather than sellers, providing the war chest for merger and acquisition opportunities.

As at 9.53 am, CapitaLand was down 2 cents or 0.7% at $2.74 with 2.1 million shares changed hands.

CDL was up 2 cents or 0.2% at $8.23 with 203,100 shares traded.