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What Do CapitaLand Limited, Frasers Property Ltd, and City Developments Limited Have To Say About the Private Property Market in Singapore?

Sudhan P.

Earlier this week, news broke that the largest collective sale in more than 10 years had taken place in Singapore. Pacific Mansion was sold for S$980 million, marking the largest sale since Farrer Court was divested at S$1.34 billion in 2007.  The deal is also the largest transaction in the current en bloc cycle, surpassing the deals for both Tampines Court (S$970 million) and Amber Park (S$907 million).

From the record-high bid for residential land that has not been witnessed in years, we can see that the sentiment on the ground for the property market is upbeat. The better feeling overall about the property market is not surprising since the Urban Redevelopment Authority’s property price index (PPI) of private residential properties reached a turning point in the third quarter of 2017, after 15 straight quarters of declines. The PPI is an index which tracks the prices of private homes.

The chart below shows how the PPI has moved since the first quarter of 2013:

Source: Urban Redevelopment Authority

With the improving sentiment, I wanted to see what some of the locally-listed property giants such as CapitaLand Limited (SGX: C31), Frasers Property Ltd (SGX: TQ5), and City Developments Limited (SGX: C09) have to say about the private property market. I dug through their latest quarterly earnings reports to learn more.

In its 2017 fourth quarter report, CapitaLand said that it “expects residential property market sentiment to remain positive, underpinned by increased transaction volumes and a recovery in home prices.” CapitaLand’s view gels with the news flow we see currently.

Frasers Property added some colour with statistics from the property sector, before pointing to a “market recovery.” It mentioned in its first quarter report for its fiscal year 2018:

“Transaction volumes improved for the Singapore private residential property market in 2017 with about 10,600 new private homes sold, which is about 33% more than the 8,000 units sold in 2016. The private residential property price index grew 0.8% in the December 2017 quarter, similar to the 0.7% growth in September 2017 quarter.

For the whole of 2017, prices increased by 1.1%, compared to the 3.1% decline in 20163. The increase in private home prices was driven by higher sales volumes, indicating a market recovery. Some industry experts expect private home prices to rise on the back of higher land prices transacted.”

City Developments also has a rosy outlook on the property market. It said in its 2017 fourth quarter earnings report:

“Urban Redevelopment Authority (URA) data indicated that private residential property prices increased by 1.1% compared with the 3.1% decline in 2016. Notably, after 15 consecutive quarters of decline from Q3 2013 to Q2 2017, prices started to inch up in the last two quarters of 2017, signalling that prices may have bottomed.

With property prices rebounding after a four-year bear market coupled with increased sales volume, the boost in market sentiment points to a likely recovery of the residential market. The improved market sentiment has resulted in a positive spill over to the EC market and a revival of the collective sales market. Residential collective sales hit a record high of $7.64 billion as at December 2017.”

From what we have above, it’s clear that the three property giants are optimistic about the residential property market. However, investors looking to invest in property stocks to ride on the growth of the sector should still conduct thorough research before investing any of their hard-earned money. Not every boat gets lifted by a rising tide.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn't own shares in any companies mentioned.