Increasing private residential land supply
? New residential units under the Confirmed List in the GLS programme
increased to 3,505 units for 2H22 (from 2,785 units in 1H22).
? The increase in residential supply is likely to enable developers to replenish
their landbank.
? Reiterate sector Overweight on valuations. Preferred picks: CIT, CLI, UOL
2H22 GLS programme offers 14 confirmed and reserve sites
? The government has released land sites for 7,310 residential units (3,505 confirmed,
3,805 reserved), 94.75k sq m GFA of commercial space and 530 hotel rooms under its
2H2022 government land sale (GLS) programme. Of the total 14 sites, seven are new
offerings, namely at Marina Gardens Lane, Tampines Avenue 1, Lentor Central,
Clementi Avenue 1, Jalan Tembusu, Senja Close (EC) and Tengah Plantation Loop
(EC). The Marina Gardens Lane site is the first land parcel to be offered in the Marina
South precinct, located near Gardens by the Bay.
Boosting confirmed residential supply
? Overall, the private residential supply in the 2H22 Confirmed and Reserve List is 12.5%
higher hoh as the government sought to address the dwindling unsold inventory
situation, in our view. While the overall residential land supply earmarked under the
2H22 GLS is the highest level since end-2018, it is still below the average supply over
the past 10 years of c.9,000 units. We believe this increase in land supply will likely
enable developers to replenish their landholdings and extend their development income
visibility, while taking into account macro uncertainties, including rising interest rates and
slower economic growth outlook.
Maintain forecast of up to 5% price growth for 2022F
? Meanwhile, the URA property price index recorded a 0.7% qoq improvement for 1Q22,
supported by a 2.2% price hike for OCR properties. According to Singapore Real Estate
Exchange (SRX) data, private and HDB resale prices continued to rise by 0.7%/1.1%
mom in Apr 2022, bringing YTD (Jan-Apr) price improvements to 2.7%/3.7%,
respectively. We retain our expectation for private home prices to rise by up to 5% in
2022F, broadly in tandem with GDP growth projections.
Reiterate sector Overweight
? Developers’ valuations still look inexpensive to us, trading at a 42% discount to RNAV,
close to 1 s.d. below the long-term mean discount. We prefer developers with visible
residential pipelines and strong balance sheets that would enable them to tap into any
opportunities during this slower cycle. Our preferred picks are CIT, CLI and UOL. Sector
re-rating catalysts: good sell-through rates for new launches. Downside risks: fasterthan-expected interest rate hikes, slower economic outlook and property cooling
measures that could dampen demand for housing.