? Post cooling measures in Apr 23, developers’ response to three land tenders continues to be fairly well received.
? Launch of Pinetree Hill could catalyse UOL’s share price in the near-term.
? Reiterate sector Neutral. Preferred picks: CLI, CIT, UOL. 3-4 bids for Marina Gardens Lane and Tampines Ave 11 land tenders
? A land tender at Marina Gardens Lane by URA received 4 bids at the close of tender on 27 Jun. The top bid came from Kingsford Huray, with a price of S$1.03bn (S$1,402psf ppr). This bid is c.42% higher than the second-highest bid of S$727m from a JV between Guocoland, Guoco Group and Hong Leong Holdings. Far East Organisation and Sino Group together with CIT placed the third bid of S$703.3m. The lowest bid came from Japura Development, at S$148m.
? This land parcel can yield about 790 residential units and up to 8,073 sf of commercial space. This residential land plot will kick-start the development of the 45ha Marina South precinct. At the top bid, we estimate the breakeven cost could range from S$2,100- 2,200psf.
? Meanwhile, a tender by HDB for a mixed-use development at Tampines Ave 11 closed with 3 bids. A JV between UOL-Singapore Land and Capitaland Development put in the top bid of S$1.21bn (S$885psf ppr) while the other bidders, Allgreen Properties and Sim Lian Land/Sim Lian Development put in a bid of S$1.06bn and S$909.09m, respectively.
? The mixed-use site with a maximum 1.364m sqft of gross floor area comprises commercial and residential components integrated with a bus interchange, community club and hawker centre.
Robust response to Plantation Close EC tender
? The tender for an Executive Condominium (EC) site at Plantation Close by HDB was well received with a total of 9 bids submitted. The site, with an estimated 495,532 sqft of gross floor area, can yield 495 units, and is located between the future Tengah Park MRT station and Bukit Batok West MRT station. The bids will be evaluated under the Concept and Price revenue tender system.
? According to a Business Times report, the bidders include CIT, Hong Leong Holdings, Capitaland Development, FPL/Sekisui House, Hoi Hup Realty/Sunway Development, Sim Lian Group as well as entities linked to various groups including Qingjian Group, Santarli Construction, Kingsford Huray, Sim Lian Group and Evia Real Estate.
Pinetree Hill to preview from 29 Jun
? Meanwhile, according to media reports, the Pinetree Hill project will preview on 29 Jun and sales booking from 15 Jul. Average selling prices are expected to start from S$2,236psf, in line with market expectations of c.S$2,300psf. The project is 80% held by UOL and the remaining 20% by Singapore Land group. This development comprises 520 residential units. About 78% of units are one to three bedders. Prices of the onebedroom units (538 sqft) start from around S$1.2m while the two-bedrooms (from 700 sq ft) are priced from S$1.6m. The three to five bedders, with sizes ranging from 969- 1,733 sqft, have price tags ranging from S$2.2m-S$4.3m. We reckon breakeven cost could range between S$1,900-2,000psf and generate an estimated PBT of c.S$40m when completed.
Maintain sector Neutral
? Share prices of developers have been range-bound YTD, and valuations still look inexpensive, in our view, at a 53% discount to RNAV, close to 1 s.d. below the long-term mean discount. We prefer developers with strong balance sheets and recurring income streams that would enable them to tap into opportunities during this slower cycle.
Our preferred picks are CLI, CIT and UOL.
? Potential sector re-rating catalysts: good sell-through rates for new launches. Downside risks: faster-than-expected interest rate hikes, slower economic outlook, and property cooling measures that could dampen demand for housing.