"PROPERTY PRICES CONTINUE skywards in Singapore and on Sentosa" has appeared in the headlines recently. As much as the recent hype on the Gulf Oil Spill that has been tormenting our Oil & Gas counters, Property counters and REITs has been 'consolidating' with low volume. Here's a report:
On Jul 1, the Urban Redevelopment Authority (URA) released the flash estimates of the property price index (PPI) for 2Q10 which indicated that property prices are above their 1996 peaks.
Citi is expecting rental and resale prices in in the mass-market segment to rise by another 5–10%, but warns that policy risk remains in this segment.
Citi is recommending the low-risk S-REITs over developers “given the increasingly unfavourable risk/reward ratio”. Among the developers, its top pick for the sector is CapitaLand for its attractive valuation and diversified portfolio followed by hold recommendations for CapitaMalls Asia and Keppel Land because of their limited exposure to Singapore residential property. Citi has sells on City Developments and Allgreen Properties which are skewed towards residential segment.
It likes the REITs most, and its favourites are Ascendas REIT, CapitaCommercial Trust, Suntec REIT and Mapletree Logistics Trust.
CIMB favours the office segment and its top pick is Keppel Land. According DTZ estimates, office rents bottomed in 2Q10 after having fallen 50–60% from the peak in 3Q08. Prime offices in Raffles Place led the turnaround in rents with a 1.3% increase quarter-on-quarter to $7.90 per sq ft per month. Cheng Siow Ying, DTZ’s Executive Director (Business Space) says in a report dated June 29: “Due to the strong economic recovery, a large number of new leases signed in the first half of the year involved companies taking up expansion space. We see broad based recovery in demand from all business sectors led by banks and financial institutions.”
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