SINGAPORE (June 28): Under the latest 2H18 land sale programme, the Singapore government has released land sites for a total of 8,040 residential units -- 2,775 confirmed and 5,335 reserve, 930 hotel rooms and 124,200 sqm of commercial space.
In all, seven sites were carried over from the 1H18 programme and seven new parcels were introduced.
The private residential component was little changed from 1H18. However, the commercial space component was increased, largely due to the introduction of a mixed use site in Pasir Ris. There was an allocation for 930 new hotel rooms, the first since 2013.
This will hold residential supply steady, with new sites for commercial and hotel developments, says CGS-CIMB Securities in a Wednesday report.
“We expect private home prices to improve and are still positive on hospitality sector. Maintain sector “overweight”. Sector top picks are UOL and City Developments,” says analyst Lock Mun Yee.
Notable land parcels include a mixed use retail/residential site with integrated community and interchange facilities in Pasir Ris, a mixed use parcel at Marina View that can house 905 residential units and 540 hotel rooms with a small component of retail facilities. There is also one executive condominium site in Tampines Ave 10 with potential for up to 695 units.
With the latest planned supply, Lock says there is a potential supply of 20,000 new units from the GLS (government land sale) and en bloc land parcels in the pipeline, in addition to the 24,000 unsold units from projects with planning approval.
As at 1Q18, an estimated 9,848 and 9,446 private residential homes are expected to be completed for 9M18 and 2019.
“Hence, we expect private home prices to continue their upward trajectory, albeit at a slower pace, for the remainder of this year,” says Lock.
In the hospitality sector, inbound tourists into Singapore were robust with 6.18 millin arrivals for 4M18, up 6.7% y-o-y. Hotel occupancy average was 86.2%, +1.4% pts y-o-y while Revpar rose 4.4% y-o-y, over the same period.
Meanwhile, the pace of new incoming supply of hotel rooms is expected to increase by a modest 1-2% annually over the next two years. The new hotel land under the 2H18 GLS, when acquired, is expected to add to supply only in the longer run. Hence, CGS-CIMB is retaining its positive view on the Singapore hospitality sector.
“We continue to remain positive on property developers,” says Lock, “Valuations are attractive, at 44% discount to RNAV and 0.71x P/BV, which is back to the -1 s.d. levels. We continue to prefer the big-cap names such as UOL and City Developments.”
As at 12.59pm, shares in UOL and CityDev are trading at $7.55 and $10.85 respectively.
