SINGAPORE (June 19): CGS-CIMB Research is maintaining the Singapore property sector at “overweight” following a 28% month-on-month increase in home sales volume in May.

Some 952 new private housing units were sold in May, 28% higher than in April, but 15% lower compared to May 2018. The bulk of sales (51%) came from Rest of Central Region, while suburban projects made up another 43%. The most popular developments included Amber Park, Parc Komo and The Woodleigh Residences, which collectively accounted for one third of sales.

For 5M19, primary home sales totalled 3,632 units, 4% higher than a year ago.

“This represents a 74% take-up rate for the 4,927 units that were launched, indicating continued buying interest in the market. We maintain our expectation for a 9,000-10,000 sales volume for 2019F,” says analyst Lock Mun Yee in a report on Monday.

Despite the optimistic outlook, private home prices are set to remain range-bound, as the Urban Redevelopment Authority (URA) property price index has dipped 0.7% from its 3Q18 high, indicating that the market is reaching a new equilibrium.

“We expect private residential prices to remain competitive in the face of a large number of potential new launches. Hence, we retain our expectation for private home prices to fluctuate between 0% and 3% in 2019F,” says Lock.

According to Lock, property stocks should trade range-bound while awaiting fresh sector catalysts such as improvement in sell-through rates or sustainable take-up rates.

Lock adds that she likes diversified companies given their diversified income sources and growing recurring income base.

Hence, CGS-CIMB has ‘add’ recommendations on CapitaLand, City Developments and UOL, with target prices of $3.56, $10.66 and $8.45 respectively.

As at 10.35am, shares at CapitaLand, CityDev and UOL are trading at $3.50, $9.61 and $7.41 respectively.


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