DBS: ‘Myriad of catalysts’ to drive Singapore property prices higher

Singapore CBDSingapore CBD

Singapore residential property transactions are already beating expectations this year and a “myriad of catalysts” are poised to drive prices higher, DBS said in a note on Monday.

For January and February, around 3,200 units were sold, including the primary and secondary markets, up 14 percent on-year, with transaction values up 46 percent, mainly driven by the secondary market, DBS noted.

”As we approach the traditional peak period for property transactions in the coming months (around 55 percent to 60 percent transacted between April-September in any given year), given the positive sales momentum, we believe that there’s a high chance that transaction values this year will exceed our estimate,” of a 10 percent rise on-year, DBS said.

Foreigner demand

One key catalyst: Foreigner demand has returned, DBS said, pointing to the New Futura project, which sold 48 units out of the 64 launched in “surprisingly strong” demand for a luxury project, as foreigners bought nearly 60 percent of the units despite a high outlay.

Strong presales at other upcoming launches, with 10 projects with more than 2,500 units hitting the market in coming weeks and another 15 projects with around 9,000 units after that, will be “strong catalysts” for developer shares, DBS said.

But the bank said its recent investor meetings indicated that while the property developer shares remained “fairly well owned,” investors felt it was too early to take profit and were hungry for “proxies.”

It tipped APAC Realty, rated Buy with a S$1.42 target price, as a key proxy to expected strong sales momentum.

DBS said sector valuations were attractive at around 0.9 times price to net asset value (NAV).

Its top picks remained City Developments, with S$15.40 target, UOL, with S$10.23 target, mid-cap Roxy-Pacific, with S$0.69 target, and Chip Eng Seng, with S$1.18 target. DBS rates all four at Buy.

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