Property

Property: The monthly NUS Sg Residential Price Index, which tracks prices of completed projects, has shown that prices of non-landed private homes went up 2.5% in May up from 1.1% in Apr and 0.2% in Mar. This was primarily in the central region (districts 1-4 and 9-11) which went up 3.5%...

Prices in the non-central region is approx 1.7%. Resale prices of private condos also grew faster in 2Q by approx 3.3%qoq for districts 9, 10, 11 and 3.9%qoq in the suburban areas. HDB has cautioned potential buyers to bear in mind the supply in the pipeline of 68.9k priv residential units as of 1Q and 4.2k EC units.

Property: DBS issues sector report highlighting that property stock prices have fallen by 12% YTD and appear to have factored in risk of falling residential prices, policy risk and weaker macro environment. Sector’s disc is now 32% to RNAV. Key themes of exposure to office and high-end residential plays are touted…

Office rentals and values are still rising and high end developers have an opportunity to launch projects due to anticipated dip in new completions and monetize RNAVs...

Top picks for office theme include KepLand (Buy TP$4.69) and Singland (Buy TP$8.26). For high-end residential theme, Wing Tai (Buy TP$1.94) and Ho Bee (Buy TP$1.76) are preferred.

Office: Rentals in SG registered a high single-digit growth in 2Q11 despite falling occupancy rates. Average mthly gross rents of Grade A office saw a 6% qoq growth in 2Q. Despite latest increase, Grade A office rents remain about 37.4% below the peak of $14.22 psf/month seen in 3Q08. Occupancy rates for Grade A office space, meanwhile, fell to 93.5% in 2Q vs 94.2% in 1Q. Drop in occupancy rates due to a rise in supply of space from the completion of new office developments…..

Looking ahead, Colliers expects some speed bumps, where mkt optimism could be tempered by downside risks from unresolved debt crisis in EU, a slowdown in China's economic growth, uncertainty of the US economic recovery and possible withdrawal effects of the ending QE 2. However tip rents to generally remain on an uptrend ….

CS remains optimistic on the supply-demand outlook particularly for Grade A offices, where current rents are still 50% cheaper than HK’s, with room for growth. Of the REITs, like CCT, KREIT, and of the developers, prefer OUE and CDL.