- We visited City Developments (SGX:C09)’s Tembusu Grand show flat recently and came away with the view that demand, though still resilient, has softened year-to-date. Buying is also more selective with preference towards smaller units indicating cooling measures and interest rates are starting to weigh in.
- - Read this at SGinvestors.io -
- Keep NEUTRAL on real estate sector with top pick as City Developments.
We expect property prices to see a slight decline in 2H23.
- The Urban Redevelopment Authority (URA) flash estimates (1Q23) saw overall property prices rising 3.2% q-o-q, but on lower volumes (-8% q-o-q, -38% y-o-y). Non-landed properties rose 2.5% q-o-q driven by the rest of the central region, which rose 4% q-o-q attributed mainly to new launches at benchmark prices amid low overall inventory levels. We see 3 key reasons for property prices to slow down in 2H:
- - Read this at SGinvestors.io -
- impact from economic slowdown and labour market weakness, and
- sharper impact from increase in interest rates with the 3-month Singapore Overnight Rate Average or SORA rising ~50bps since start of the year.
- Overall, we maintain our full-year price expectations of -2% to +2%.
Volumes slowing amid increasing pricing expectations mismatch.
- Read more at SGinvestors.io.
Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2023-04-06
