Residential property: Unconvincing contrarian call

In Property on 22/12/2010 at 5:25 am

Brokers’ analysts are like lemmings, they move in herds. So it is nice to see Credit Suisse is bullish on Singapore’s residential property market when other brokers e.g. Nomura and CIMB are telling investors to give the sector a miss; and DBS and OCBC barely mention the sector. Sadly it is unconvincing though the call to buy CityDev makes sense in itself.

In a report last week Credit Suisse said that it expects home prices here to increase by 15% this year, and by another 5% in 2011 and 2012 each. Not much to peg bullish hopes on, I must say.

“The low interest rate environment, historical high rate of GDP growth as well as continued population growth should propel growth in the Singapore residential property market”. Err what abt less FTs being allowed in?

There were  risks such as capital inflow controls (Huh? What are they smoking or drinking at the X’mas party?) or more anti-speculation measures from the government.

But the average valuation of Singapore property stocks is still below the historical average, and the residential sector is “reaching the peak with decelerating growth momentum”. Now isn’t the latter a gd reason to avoid the sector?

Credit Suisse has an “outperform” on CityDev, target price of t $17.16.

“While … 37 per cent of its RNAV … is in residential, the landbank had been mostly acquired at low costs, and we estimate 56 per cent is in the luxury sector, which has lagged the mass market segments,” Credit Suisse said. Sounds a gd reason.

It also has “outperform” on OUE, target price of $4.20.

BTW CIMB has “underperform” on CityDev, but likes OUE and KepLand.

Time to see waz OUE all abt?


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