http://www.businesstimes.com.sg/sub/...49540,00.html?

Published October 12, 2011

CIMB downgrades S'pore property sector


(SINGAPORE) CIMB Research downgraded Singapore's property development sector to underweight from neutral yesterday, citing weaker economic and jobs growth as a recession in 2012 becomes highly likely.

'We believe these indicators will precipitate in falling housing demand and office rents,' said CIMB in a report.

It is projecting a 22-26 per cent decline in capital values for both segments in 2012, and estimates property stocks 'still has a 34 per cent downside to first quarter 2009 trough levels'. The brokerage has lowered its rating for Keppel Land to underperform from outperform and cut its target price to $2.15 from $3.90.

Keppel Land, which has 23 per cent of its gross asset value from China, may see some share price overhang due to a potential broad-based slowdown in China's property sector, CIMB said.

It has also downgraded South-east Asia's largest developer CapitaLand to neutral from outperform and lowered its target price to $2.51 from $3.62, to reflect higher risk premiums due to its China exposure.

However, CIMB noted that CapitaLand is in a stronger financial position in this cycle to tap on acquisition opportunities. -- Reuters