Singapore Property

Kim Eng on 18 Feb 2013

New home sales jumped in January. New private home sales jumped by 43% MoM in January, as developers sold 2,013 units (excluding ECs) on the back of 1,799 units launched. Including ECs, the number would have been 2,269 units. However, as the most recent round of cooling measures took effect only on 12 Jan, we believe these sales figures are unlikely to reflect true demand.

Figures likely to be skewed. The bestseller for the month was the 810-unit La Fiesta, by unlisted developer EL Development. The developer had brought forward its launch date and extended sales hours the night before the cooling measures took effect, with many buyers rushing to beat the deadline. Consequently, La Fiesta registered 404 units sold in January, at a median price of SGD1,163 psf. This was followed by Q Bay Residences, which was the first project to be launched post-cooling measures. With some clever marketing and reported discounts of up to 22%, Far East Organization (FEO) sold 372 units at the 630-unit project at a median price of SGD1,012 psf.

Other notable projects. With more aggressive pricing strategies, CapitaLand managed to sell another 263 units at the 1,715-unit D’Leedon, achieving a median price of SGD1,406 psf for the month of January. The mega-development is now 65%-sold. City Developments Limited (CDL) saw sales momentum at its highly-successful Echelon at Alexandra View being carried over from December, as another 87 units were sold in January at a median price of SGD1,853 psf.

12 units above SGD3,000 psf sold in the month. The number of luxury units priced above SGD3,000 psf sold fell from 17 in the previous month to 12 in January. Nine of the units were from FEO’s The Scotts Tower, with a median price of SGD3,825 psf and one unit attaining a month-high of SGD4,267 psf. Solitary units were sold at FEO’s Skyline@Orchard Boulevard and ALBA, as well as Perennial’s Eden Residences Capitol.

Probably just a blip. Considering that January’s figures are likely to include forward demand from investors looking to beat the cooling measures’ deadline, we reiterate that the feat is unlikely to be replicated in February and March, although it is still too early to determine if the cooling measures have indeed worked. Nonetheless, we expect the marginal investors to be priced out of the market already, given the onerous cash requirements and higher Additional Buyer’s Stamp Duty. We estimate full-year new home sales to be between 14,000 and 16,000 units.

Top-picks remain unchanged. We reiterate CapitaMalls Asia (CMA SP, BUY, TP: SGD2.55) as our top-pick amongst the big-caps for its retail exposure and Wing Tai (WINGT SP, BUY, TP: SGD2.55) for its high-end exposure. We also maintain our BUY ratings on CapitaLand (CAPL SP, TP: SGD4.27) and Keppel Land (KPLD SP, TP: SGD4.78) for their diversified businesses and China exposure.