Kim Eng on 17 Feb 2014
Slow Start To The Year
Following a very quiet December which saw developers sold a mere 259 new homes, January was only slightly better with 565 units (excluding ECs) sold, on the back of 549 units launched. Including ECs, the total number of units sold would have been 610. Of the new launches in January, the biggest contributor was The Hillford, which was marketed as a retirement resort. All 281 units of this 60-year leasehold project by Aspial were sold, achieving a median price of SGD1,105 psf. Over at Wheelock’s The Panorama in Ang Mo Kio, 58 out of the 120 units launched were sold at a median price of SGD1,343 psf. Oxley’s 90-unit Floraview in Yio Chu Kang saw dismal take-up, with just one unit sold at SGD1,396 psf.
What’s Our View
As the Total Debt Servicing Ratio (TDSR) and the cumulative effects of the various cooling measures continue to bite, we expect both developers and homebuyers to stay cautious. Launches on the horizon include the 469-unit The Crest at Prince Charles Crescent by Wing Tai and the massive 1,042-unit Marina One Residences by M+S Pte Ltd.
Our outlook for full-year new home sales to cool by 10-15% YoY to 13,000-14,000 units remains intact, together with our expectations for a 10% decline in private property prices, led by the mass market segment.
We reiterate CMA (CMA SP, BUY, TP SGD2.60) as our top sector pick for its retail mall business, underpinned by clear earnings visibility over FY14-15. CapitaLand (CAPL SP, BUY, TP SGD3.88) and Keppel Land (KPLD SP, BUY, TP SGD4.60) are still attractively priced, given their strengthening presence in China. We maintain our SELL recommendation on City Developments Limited (CIT SP, TP SGD8.30) as it remains the biggest proxy to the Singapore residential sector.
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