City Developments

City Developments: OCBC visited City Development’s (CDL) latest launch, the 508-unit condominium project Echelon, over the weekend. The project near the Redhill MRT station put up a strong set of numbers in its first weekend of sales, with over 300 units sold at ASP of around S$1.7k psf. House believe this launch performance to be above view. Estimate breakeven ASP at $1.2k psf, which translates to an attractive gross profit margin around 40% for the project. To recap, CDL together with Hong Realty, put in the top bid ($396m or $754 psf GFA) for the 99-year GLS site at Alexandra Rd in Nov 2011. Overall, house maintain BUY with a higher fair value estimate of $14.05 (10% RNAV discount), versus $13.96 previously, as house update for firmer residential ASPs into model.