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DBS: Singapore Residential – Bukit Sembawang, CityDev, Ho Bee Land, Tuan Sing, UOL, Propnex

<Alert> Singapore Property: New launches in Western Singapore to hit S$2,000 psf

What has happened

Our thought and Implications

Residential price hitting a new paradigm. We are not surprised that Wingtai has cast an eye on the collective sales market for enbloc opportunities given that the group has been unsuccessful in its recent attempts to landbank in recent government land sales (“GLS”) tenders, after its projects on its books (Gardens Residences and The M) are substantially sold. 

Based on our estimates, breakeven for this project is expected to be close to S$1,700 psf – S$1,800 psf, meaning that launch prices in the future for the site may hit S$2,000psf. This S$2,000 psf appears to be the next psychological level that the property market appear to be testing given that recent launches (Piccadilly Grand & Liv@MB) in the RCR / OCR region have cleared c.75%-80% of units within launch weekend at prices > S$2,000 psf. It was also reported that developers are expecting to hike new launch prices by up to c.5% given the robust take-up in units.  

We watch for the upcoming launch of AMO Residences from UOL (BUY, TP S$8.40) and  Lentor Modern from Guocoland (S$2.30) in 2Q/3Q for further signs of the next clearing levels for the residential market. CDL (BUIY, TP S$10.50) has also a robust pipeline of residential units (Tengah EC site, Jalan Tembusu site) for launch in 2H22-2023

Government measures not a worry for now. We believe that it maybe too early to consider further tightening given the expected rise in mortgage rates, which we see could be a natural cooling measure in the midst of higher cost of living for households. 

We note that Propnex (HOLD, TP S$1.71) is the marketing agent for the collective sale of Lakeside Apartments.  

Source: Googlemap, DBS Bank

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