Originally Posted by
Citibank
Citibank: Property Prices Will Rise By 30%
Daryl Loo
Channel NewsAsia
23 April 2007 2042 hrs
Home prices in Singapore are expected to rise much more than those in Hong Kong, over the next two years, according to Citigroup.
Speaking at an Asia Pacific property conference in Singapore on Monday, Citigroup analysts say they see Singapore residential prices jumping by as much as 30% by 2008 compared to just 10% for Hong Kong.
Price tags for private homes in Singapore will be on the rise for at least the next two years, according to Citigroup.
It sees Singapore as being in the early stages of a cyclical upswing.
This is in contrast to Hong Kong, where the cycle is on the downtrend - and expected to end by 2009.
They say that Singapore prices are being driven by high occupancy rates, which have hit a record peak of 95.7%, and set to even climb higher over the next two years.
Wendy Koh, Director, Asia Pacific Equity Research, Citigroup, said: "If you look at the residential sector, occupancy rate right now is about 93.9% as at the end of 2006. If we take into account the completion this year which is only about 5,000 units, and last year's demand was about 9,000, and on annual basis the last 10-year average was about 8,000, occupancy rates should continue to rise.
"And if you take into account the 3,500 units that were sold en bloc last year, occupancy rate is actually closer to 95.5% last year. That is a record high as we have not seen that sort of levels before."
Citigroup expects occupancy to rise further to 96.8% this year, and 97.1% in 2008, as the level of demand far outstrips supply.
Over in the office sector, it is predicting rentals to rise 56% to $18.50 psf by the end of 2008, up from $11.80 currently.
And despite the recent run-up in property counters, Citigroup sees further upside in some choice picks.
Ms Koh said: "We like City Developments, Wing Tai, Allgreen. We also like Keppel Land for office play. For the first three stocks, it's more the residential exposure. If you look at City Dev and Wing Tai, they have been replenishing their land bank, and riding the upswing in the residential market."
Private home prices in Singapore rose 10.2% last year, and an estimated 4.6% in the first quarter of this year.
Residential Market In Initial Stage Of Upswing: Citigroup
Joyce Teo
24 April 2007
Despite benchmark prices at recent property launches, the upswing in Singapore home prices is only just beginning, according to an analyst at banking giant Citigroup.
Yesterday, Ms Wendy Koh told reporters that the residential market is still in an 'early phase' of a cyclical upswing.
The property market recovery starting this year is across the board, she said.
Prior to a pickup in the mid-market segment in the second half of last year, the upturn was clearly visible only in the luxury home sector.
According to Ms Koh, demand continues to outweigh supply and occupancy rates are likely to reach new highs.
Taking into account recent collective sales, real occupancy is already at a record high of 95.7% versus the reported 93.9%, and it will rise further, she said.
That means home prices are expected to keep rising this year and next, she said. The luxury home market will continue to rise by another 10% to 15% this year.
The mid-market segment may go up by 10 to 20%, the mass market by 10% and the Housing Board (HDB) market by 5 to 10%, she said.
The HDB market is helped by the lessening supply of unsold but completed HDB flats, she said. There are now 4,000 such flats, dramatically down from 25,000 units a few years ago.
Ms Koh also said the office market will be strong, with prime Grade A rentals rising from $11.80 psf to $14.50 psf by the end of the year and to $18.50 psf by the end of next year.
She was speaking yesterday at a media conference held alongside the Citigroup Asia Pacific Property Conference, which was closed to the media.
Trade and Industry Minister Lim Hng Kiang made the opening speech, distributed to the media.
He said: 'Singapore can play an important role as a gateway for global investors to access Asian opportunities via our capital markets.'
A property derivatives market is a potentially exciting area for innovation, he added. If such a market were developed, Singapore would need 'transparent, reliable and well-followed' direct property indexes.
Industry players are currently studying the construction of such indexes, he said. These indexes would enhance information on Singapore's property market and provide benchmarks for structuring property derivatives and other innovative products.
Derivatives are instruments taking their value from another underlying asset, such as a stock or even a stock index.
Generally positive sentiment suggests that this year and the years ahead will be exciting for Asia and its property sector, Mr Lim concluded.
'I am certain that with judicious planning and sound execution, the sector will see strong growth, sustained by liquidity from the capital markets,' he said.
Citigroup Sees 30-40% Home Rents Hike In 2007
Occupancy hitting record highs; home prices also seen rising 12-15%
Uma Shankari
Delivering a bullish outlook on Singapore's property market, Citigroup's research team yesterday said residential rents could rise 30-40% this year as occupancy hits record highs.
'Taking into account the recent en bloc sales, we believe real occupancy is already at a record high of 95.7% (as opposed to the official figure of 93.9%),' said Citigroup analyst Wendy Koh, who covers the Singapore property market.
And on the back of good demand, residential property prices could go up by another 12-15% this year, outstripping last year's 10.2% increase.
The increase is due to a supply shortfall. Just 5,000 units will be completed this year, and Ms Koh predicts that demand will be substantially higher. Last year, demand for new homes hit 9,000. And over the past 10 years, demand for homes has averaged about 8,000 units a year.
The shortage is expected to continue into 2008, when just 7,000 new homes will become available.
Ms Koh said the luxury market will see a 10-15% price upside in 2007, while prices in the mid-tier segment will grow by 10-20%.
Citigroup is also bullish on the HDB resale market - which has long been stagnant - seeing a 5-10% upside for resale prices of HDB flats. 'The HDB resale market will likely pick up in both volume and prices, which would in turn help support the mass market segment,' said the bank in its latest research note. Ms Koh predicted that mass market prices will climb by about 10% this year.
Office rents will also similarly rise, she said. Rents could hit $14.50 psf by end-2007 and $18.50 psf by 2008.
The bank recommended that investors buy shares of City Developments, Wing Tai, Allgreen Properties and Keppel Land.