http://www.businesstimes.com.sg/sub/...94340,00.html?

Published January 27, 2012

Mass market prices to correct by mid-year

Available supply, uncertain outlook will lead to adjustment: Kim Eng

By MINDY TAN


THE rapid sales at developers' launches in recent weeks will not last, Kim Eng Research said in a report released yesterday, citing the potential supply of units coming on board and wider economic uncertainty.


Snapped up: The Hillier at Hillview (above) has attracted strong demand, as has Watertown, which has sold more than 550 units of its 992-unit project

These factors could lead to a correction in both average selling price and sales volumes by the middle of the year, it said.

Based on the sites sold under the Government Land Sales programme (GLS) that have yet to be launched, the brokerage estimates that the potential supply coming onto the market over the next 12 months stands at 12,248 condominium units, and 2,495 executive condominium units.

Coupled with a 'daunting income and employment outlook' due to economic concerns, this could make upgraders more wary come mid-2012.

'That may then lead to the precipitation of mass market prices of up to 20 per cent by end-2013. We also expect primary market sales to be reduced to 11,000 units per annum for 2012 and 2013,' said Kim Eng.

In the meantime, home buyers and property developers are back in the market with a vengeance, just one month after the introduction of the additional buyer's stamp duty (ABSD).

Watertown, in Punggol Central, for instance, has sold more than 550 units of its 992-unit mixed-development project since its preview last week. The Hillier at Hillview, too, attracted strong demand, with units transacting at an average of $1,200 per square foot (psf).

'In the near term, demand for attractive suburban projects may continue to be supported by the benign interest rate environment, and our economists are not expecting interest rates to hike up markedly before 2H13,' said Kim Eng.

Developers were also active in vying for well-located sites during GLS tenders. In particular, the two most recent tenders at Clementi Avenue 6 and Simon Road attracted eight and 11 bids, respectively.

The top bidder for the 99-year leasehold condominium site at Clementi Avenue 6 was IOI's property unit, Multi Wealth (Singapore), at $554.4 psf per plot ration (ppr), while the site at Kovan Road/Simon Road was awarded to a consortium comprising Hoi Hup Realty, Investment Focus and Oriental Worldwide Investments, at $506.6 psf ppr.

Industry players said that the bids were within the current land price range for good suburban residential sites, and that attractively located sites will probably continue to draw strong participation from developers despite the uncertain market conditions and cooling measures.

Kim Eng said that it remained neutral on developers with significant exposure to the Singapore residential market as downside risks have been priced in. It has a preference for diversified players such as CapitaLand (target price $3.21) and Keppel Land (target price $3.30).

CapitaLand shares closed up four cents at $2.62, while Keppel Land closed down two cents at $2.85 yesterday.