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Singapore Property Companies: Good response to new launches
By: LOCK Mun Yee
• New launches continue to be well received
• More pricing incentives means less upside momentum
• Maintain BUY on CMA, Capitaland and Wing Tai
Brisk sales continue. Our visit to the Q Bay Residences showflat over the weekend showed that crowds continue to flock to new project launches even after the recent cooling measures. Far East Organisation/ Frasers Centrepoint/ Sekisui House’s JV project, Q Bay Residences, located near Tampines Ave 10 and Tampines Ave 1, is a 630 unit development, which is accessible to major arterial roads such as the TPE and PIE and is about 10mins walk from the new Tampines West MRT, scheduled to open in 2016. It also has shopping and schooling amenities such as UWC close by. It is also in close proximity to the Tampines Quarry Park and Bedok Reservoir Park. The developer has released 388 units comprising the smaller SUITES 1-2BR units, 3-bedder Verandah units and larger TRIO units. Of these, we understand an estimated 90% had been taken up since its preview launch on Friday.
Developers respond with more incentives, buyer profile leaning towards upgrader/investment demand. Prices averaged S$985-1,050psf, after taking into account total discounts of up to 23-24% including early bird discount of 14-15%, another 4% incentives from loyalty, HDB upgrader, special vicinity or multiple purchase discounts as well as a 7% stamp duty discount. We understand buyers were largely Singaporeans, and for this development, there was interest from upgraders as well as investment demand from those who are looking for investment units but still qualify for up to 80% LTV. Mortgage rates are still at sub 1.5% for the first 3 years. Elsewhere, in other developments such as D’Leedon, developers are also dangling more incentives with higher discounts of 10% for the 1-2 bedders to 15% for the 3-bedders or 3+study units.
Prefer CMA, Capitaland and Wing Tai. The response above shows that price upside momentum is likely to be eroded by increased incentives and we maintain our expectation for a 5% drop in average private home prices this year, although volume demand seems to be ahead of our expectations at this point. With limited price upside, we expect developers’ RNAVs to remain flat. Hence, our strategy for the sector is to continue to prefer companies with asset monetisation capabilities such as CMA and Capitaland and our top mid cap pick remains Wing Tai for its attractive valuations.
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Singapore Property Good response to new launches
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21-Jan 2013 Monday
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