In today's edition
With the recent sell-off in the market, the developers have given up most of the YTD gains, trading at 35% discount to our RNAV estimates, almost at 1 s.d. below average level. This was where the sector traded at a year ago. Fundamentally, much has changed in the past year, with pricing now meaningfully below where it was, especially for the HDB and luxury market and volume stabilizing. We believe that with a number of the launches coming through in 2H and possibly more clarity on the political front, this presents a good entry level for the sector. We reiterate our preference for developers.
May new home sales down on lack of new launches
May new home sales (excluding EC) dropped to 638 units (-43% MoM, -57% YoY), mainly due to a lack of launches during the month. Westwood Residence EC was the only new launch for the month. Botanique at Bartley and North Park Residences continue to top the sales with 94 units and 59 units sold during the month, respectively. Interestingly, there is a consistent pickup in the number of units sold in the >S$2,000psf category over the past two months, despite no new launches in that segment. With a lack of new launches in June so far, we expect new home sales to remain moderate in the coming month. The next key launch to watch is the Gramercy Park project by City Developments.
Teijin to close Jurong Island plat, sell the site
According to the Business Times, Teijin is closing its polycarbonate resin plant in Singapore by the year end and putting the industrial facility on Jurong Island up for sale through an expression of interest. Colliers International has been appointed for the sale of Teijin’s 1.5m sqft facility. The site along Sakra Avenue has a remaining tenure of 12 years and an option to renew the lease for another 30 years.
Retail sales up 5% in April, but buoyed by motor vehicles
Retail sales for April expanded 5% YoY, buoyed by double-digit sales growth in motor vehicles. Stripping out sales of vehicles, sales for the month were down marginally (-0.7%), according to the Department of Statistics. Other categories that posted higher YoY sales included telecommunications apparatus & computers (+3.8%), department stores (+3.4%), and watches & jewellery (+3%). Categories with lower sales include petrol service stations (-21.1%), F&B (-7%), and recreational goods (-5.1%).
Mapletree Greater China Commercial Trust buys asset in Shanghai
Mapletree Greater China Commercial Trust (MAGIC SP) announced yesterday that it has acquired Sandhill Plaza in Shanghai for about S$402m from MSREF VII Leaphart BV. This is the first acquisition since MAGIC’s listing. The property is a business park located in Zhangjiang Hi-tech Park in Shanghai with GFA of 83,801sqm and a committed occupancy of 96.2%.
OUE Commercial Trust to acquire stake in One Raffles Place
OUE Commercial Trust announced that it plans to acquire between 61.16% and 67.95% of One Raffles Place for c. S$1bn (S$2,382psf NLA). Under the deal, OUE will first acquire the Kuwait Investment Office’s stake (25% to 33%) in OUB Centre, and then inject its combined stake (75-83.33%) into OUE Commercial Trust. Recall that OUB Centre currently holds an 81.54% stake in One Raffles Place. OUE will not book a gain on the sale, as it considers OUE Commercial Trust a subsidiary.
Rents continue to fall
According to the Business Times, rentals for condominiums fell 0.6% in May, driven by rising completions. Industry watchers note a flight to quality as rents in the central area rose 0.2%, while rents in the city fringe and suburbs fell 0.6% and 1.5%, respectively. Rental volumes also declined 3% MoM in April, but were up 6.2% YoY. Industry consultants expect rents to continue to fall through 2016.
Ascendas-Singbridge merger complete
The Business Times reports that four Singapore urban planning and development companies have completed their mergers. The first merger combines Ascendas and Singbridge into one entity, held by Temasek Holdings and JTC (51% and 49%, respectively). Meanwhile, Jurong International Holdings and Surbana International Consultants will also be merged, with Temasek and JTC holding 51% and 49%, respectively.
Australand signs Ceva Logistics
Australand announced that it has signed Ceva Logistics as its tenant for a 90ksqm site at West Park Industrial Estate. The facility will be completed in mid-2016, with Ceva signing a 10-year lease on the site. (Read Report)
Source : Deutsche Bank Markets Research