Developers’ share prices should continue to “grind higher” with volumes expected to pick up in October and November alongside keen demand for five government land tenders in the fourth quarter this year, says Citi Research analyst Brandon Lee.
His report, dated Sept 15, comes after primary residential sales for August surged by 128% m-o-m and 915% y-o-y to 2,142 units, excluding executive condominium (EC) units. Including ECs, sales grew by 78% m-o-m or 847% y-o-y to 2,338 units, which Lee attributes to softer mortgage rates and a “solid” take-up for four out of five new private non-landed residential launches. This was led by the 941-unit Springleaf Residence, which sold 884 units; the 524-unit River Green, which sold 451 units; and the 596-unit Promenade Peak, which sold 333 units.
During the month, the mass market accounted for 58% of the sales, followed by high-end at 22% and mid-end at 20%.
While Lee expects total primary volume sales to hit around 8,900 units in FY2025, 38% higher y-o-y, he believes the strong sales in August is likely to repeat only in October and November, after a “tepid” September due to the lack of new launches as a result of the Hungry Ghost Festival. In October and November, five major projects will be launched, namely the 355-unit The Sen, 706-unit Zyon Grand, 460-unit Penrith, 403-unit Faber Residence and the 666-unit Skye at Holland.
Among the developers, Lee says he continues to like UOL Group and City Developments Limited (CDL) for their undemanding valuations at a revalued net asset value (RNAV) discount of over 50%. Both are seen as the most direct proxies to the Singapore property sector due to their exposure of 84% and 52% for UOL and CDL respectively.
Lee has “buy” calls on both groups with target prices of $9.60 and $9.01 for UOL and CDL respectively. Both target prices are set at a 40% discount to their RNAVs of $16 for UOL and $15.01 for CDL.
