February’s drop in Singapore primary residential sales is just a blip and launches and sales are about to take off, CGS-CIMB said in a note last week.
It noted that Febuary’s primary home sales were just 377 units, down 61 percent on-year and 28 percent on-month.
“We think this was largely due to the lack of new launches amid the Chinese New Year lull,” it said. “In our view, a more meaningful comparison would be the take-up rate, which stood firm at two times in Feb, indicating still-healthy buying interest in the residential market.”
CGS- CIMB said it expected the pace of new launches would pick up, noting the Nim Collection landed project was being marketed and the Margaret Ville and The Tapestry projects were currently being “sounded out” for the interest level. The brokerage said it was sticking with its forecast for new launches of 10,000 units this year.
Sticking with sales forecasts
It was also sticking with its forecast for full-year sales of 11,000-12,000 units for 2018, despite combined January and February sales only coming in at around 10 percent of that total.
“The rising pace of upcoming new launches could attract more buying interest in the market, amid an average 5 percent increase in private home prices,” it said.
The brokerage said that Singapore-listed property stocks are trading at a 35 discount to RNAV, or revalued net asset value, on average.
“With anticipated newsflow on upcoming new launches in the sector, we believe there is room for share price outperformance by property stocks,” it said.
The brokerage said it was sticking with an Overweight call on the sector, with UOL and City Developments as its top picks, with target prices of S$13.44 and S$9.67 respectively. It rated both at Add.
