SINGAPORE (March 15): OCBC is reiterating its “buy” call on CapitaLand Retail China Trust (CRCT) at a fair value of $1.56 following the issuance of the Colliers’ Beijing Retail Report for Jan 2017.
In a Wednesday note, analyst Deborah Ong highlights that the report expects vacancy rates to stay low of around 5% up to end-2017, and for rent to increase by 1.5% y-o-y by end-2017.
“[Colliers suggests] that because of limited land supply and government restrictions on developing new shopping centres in major downtown areas, new supply growth is expected to slow in the following years and the market should continue to favour landlords,” she elaborates.
As CRCT currently has three multi-tenanted malls and two master-leased malls in Beijing, the analyst continues to find the REIT attractive at its current price levels, especially given the “stable outlook” she observes in the Beijing retail market thus far.
“In 2016, Beijing’s GDP increased 6.7% while retail sales grew 6.5% to RMB 1,100.5 billion ($225.1 billion). Urban disposable income and expenditure per capita grew 8.4% and 4.4% respectively,” she adds.
As at 11:11am, units of CRCT are trading flat at $1.42.
