'Long Winter' Seen Ending for Singapore Home Prices: Survey

By Krystal Chia and Livia Yap

/ Bloomberg |

January 23, 2018 12:00 PM SGT

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The worst may be over for Singapore’s property slump.

After a four-year slide in private residential prices, analysts are now calling an end to the property downturn. Singapore home prices have risen for two consecutive quarters and they are expected increase by about 5.5 percent this year, according to a survey by Bloomberg.

There’s also the earnings season to look forward to next month as the upbeat outlook for the real estate market may augur well for Singapore developers.

On Feb. 28, City Developments Ltd. is expected to post an annual profit of S$563.4 million ($428 million), according to Bloomberg data. CapitaLand Ltd. and UOL Group Ltd. are also both seen publishing earnings statements in February with analyst estimates pointing to a 9.4 percent increase in UOL’s full-year net income.

"It has been too long a winter for the Singapore residential market,” Christine Li, director of research at Cushman & Wakefield Inc. said in an email. “With Singapore’s economic outlook looking rosier, investor confidence is on the road to recovery.”

The city-state’s real estate sector looks to be emerging from its rut amid a jump in home sales and aggressive bids for land by developers. An index tracking private residential prices rose 1 percent in 2017, compared to a 3.1 percent decline in 2016, data from the Urban Redevelopment Authority showed.

A poll of 11 analysts conducted between Jan. 11 to Jan. 22 showed a median estimate of a 5.5 percent rise in home prices this year.

FIRM	ANALYST	ESTIMATE (%)
CIMB	Lock Mun Yee	3-5
Credit Suisse	Louis Chua	5-10
Cushman & Wakefield	Christine Li	5-7
DBS	Derek Tan	6-10
Jefferies	Krishna Guha	3-7
JLL	Ong Teck Hui	4-7
Macquarie	Soong Tuck Yin	3-5
Maybank	Derrick Heng	3-4
Morgan Stanley	Wilson Ng	8
OCBC	Eli Lee	3-8
UOB	Vikrant Pandey	5-10

(Credit: Bloomberg)

While the turnaround has been accompanied by a surge in collective sale deals -- which has fueled concern of a potential oversupply -- it is “far too early to be worried” as the redeveloped properties won’t resurface until 2020 at the earliest, Derrick Heng, an analyst at Maybank Kim Eng Securities Pte. wrote in a note.

Singapore’s property stocks have benefited from the recovery in investor sentiment as developers City Developments and UOL Group were among the top five performing stocks on the benchmark Straits Times Index last year. Both companies rose by about 50 percent each.

“Despite the strong run last year, valuations are not yet stretched, particularly in comparison with past periods of a property upcycle,” said Low Xin Yan, an investment analyst at Janus Henderson Investors. “We expect the positive performance for property stocks to continue,” she said.

— With assistance by Sree Vidya Bhaktavatsalam

This story, written by Krystal Chia and Livia Yap for Bloomberg, first appeared on Jan 23.

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