Property stocks forecast to build on their gains

[reporter2]

http://www.businesstimes.com.sg/arch...gains-20130101

Published January 01, 2013

Property stocks forecast to build on their gains


[SINGAPORE] SINGAPORE property stocks, the best performers on the benchmark Straits Times Index last year, are set to extend their gains in 2013 on higher demand for homes, offices and hotels, according to UOB-Kay Hian.

Six of the top 10 gainers on the 30-member gauge were real estate-related stocks, led by CapitaLand Ltd, South-east Asia's biggest developer, and its retail property unit CapitaMalls Asia Ltd.

The benchmark's property index, which tracks 40 developers, gained 48 per cent, set for its best performance since 2009.

"There's some more room for outperformance," said Vijay Natarajan, an analyst at UOB-Kay Hian Pte. Gains will be driven by "the disconnect over the last two years between the physical market and the shares".

"As property prices remained firm and there was genuine demand from the low interest rate environment, investors started buying property stocks again," he said.

Demand for homes and offices in the island-state of 5.3 million people boosted home prices to a record in the third quarter.

Singapore's real estate investment trusts that invest in offices and retail spaces posted the best returns globally this year, driven by acquisitions and higher rents.

Singapore's property stocks, including Reits, have a market capitalisation of US$126 billion and make up 22 per cent of the Straits Times index, according to a Dec 13 report by Bank of America Corp's Merrill Lynch unit.

The city's private residential price index rose 0.6 per cent in the quarter ended Sept 30. New home sales are expected to reach a record 22,000 this year, according to Jones Lang LaSalle Inc.

Gains in share prices this year have also been driven by acquisitions and privatisation bids.

Overseas Union Enterprise Ltd made a US$10.7 billion bid for Singapore property developer and drinks maker Fraser & Neave Ltd, while SC Global Developments Ltd's chief executive Simon Cheong offered to take the luxury home developer company private.

Fraser, whose property business is its biggest sales contributor, jumped 56 per cent this year, and SC Global shares surged 92 per cent, making it the second-best performer on the property index.

Top Performers CapitaMalls climbed 73 per cent this year, while its parent CapitaLand advanced 71 per cent. The STI increased 21 per cent. - Bloomberg

[reporter2]

http://www.straitstimes.com/premium/...treak-20130102

Property stocks 'set to continue winning streak'

Higher demand for homes, offices and hotels may spur more gains in 2013

Published on Jan 02, 2013


SINGAPORE property stocks, the best performers on the benchmark Straits Times Index last year, are set to extend their gains this year on higher demand for homes, offices and hotels, according to brokerage UOB Kay Hian.

Six out of the top 10 gainers on the 30-member gauge have been real estate-related stocks, led by CapitaLand, South-east Asia's biggest developer, and its retail property unit CapitaMalls Asia.

The benchmark's property index, which tracks 40 developers, gained 48 per cent last year, set for its best performance since 2009.

"There's some more room for outperformance," said Mr Vijay Natarajan, an analyst at UOB Kay Hian.

Gains will be driven by "the disconnect over the last two years between the physical market and the shares. As property prices remained firm and there was genuine demand from the low interest rate environment, investors started buying property stocks again", he said.

Demand for homes and offices in the island state of 5.3 million people boosted home prices to a record high in the third quarter.

Singapore's real estate investment trusts (Reits) that invest in offices and retail spaces posted the best returns globally last year, driven by acquisitions and higher rents.

The city's private residential price index rose 0.6 per cent in the three months ended Sept 30, while new home sales were expected to reach a record 22,000 last year, according to Jones Lang LaSalle.

Gains in share prices last year have also been driven by acquisitions and privatisation bids.

Overseas Union Enterprise made a $13.1 billion bid for Singapore property developer and drinks maker Fraser & Neave, while SC Global Developments' chief executive officer Simon Cheong offered to take the luxury home developer company private.

F&N, whose property business is its biggest sales contributor, jumped 56 per cent last year, and SC Global shares surged 92 per cent, making it the second-best performer on the Singapore property index.

"We have also got the corporate themes led by the F&N saga and more recently by the SC Global privatisation, so that's added another layer of buoyancy to the sector," said Mr Chong Yoon- Chou, the investment director at Aberdeen Asset Management Asia, which has US$80 billion (S$98 billion) in Asian assets including shares of City Developments and Wheelock Properties.

Shares in CapitaMalls climbed 73 per cent last year, while its parent company CapitaLand advanced 71 per cent.

The Straits Times Index increased by 21 per cent.

Singapore's record home prices prompted Finance Minister Tharman Shanmugaratnam to say last October that the real estate market may get "bubbly".

The Government will not allow home prices to outstrip gains in incomes, he said.

Home sales in the city may fall as much as 27 per cent this year after climbing to a record last year, as six rounds of housing curbs by the Government crimp demand, according to Jones Lang LaSalle.

Office rents in the business district declined in the fourth quarter and vacancy rates will climb this year in some prime areas, according to Cushman & Wakefield.

The country was named the eighth most expensive Asian location for international assignees, according to ECA International in June last year, down from sixth a year earlier as costs in Chinese cities, including Shanghai and Beijing, increased.

Developers will continue to benefit this year as demand for real estate increases and with the rising popularity of the island state as a destination for expatriates, said Mr Natarajan.

Investment plans by developers in markets including China will also help boost returns, he said, adding that he recommends stocks including City Developments, Wing Tai Holdings and CapitaLand.

Wing Tai, the top performer last year on the Singapore property index, is trading at 66 per cent of its book value, according to data compiled by Bloomberg.

Ho Bee trades at 81 per cent to its book value, the data showed.

Last year has been a phenomenal year for property stocks, Mr Natarajan said.

"We like some midcaps that are trading at a steep discount to book value, so some catch-up will take place."

BLOOMBERG