- The Singapore listed property developers (For exampe: UOL Group, Hongkong Land, GuocoLand and Ho Bee Land) are trading an average 0.3x – 0.4x P/B, marking one of the steepest discounts in the past 10 years.
- - Read this at SGinvestors.io -
- Despite operating under close policy monitoring, with access to attractive leverage, we estimate developers can achieve project internal rate of return (IRR) of ~10% on average. With land bid prices moderating recently, we anticipate margin expansion for selected projects acquired through 2024, provided property prices remain buoyant.
Strategies to sharpen shareholder returns
Cap-rate driven re-rating in asset values no longer the base case.
- - Read this at SGinvestors.io -
- With a new interest rate downcycle upon us, cap rates are unlikely to compress as a driver for capital value growth. Instead, upside is expected to be income-led, with a divergence favouring those assets with strong green credentials.
- With capital value growth from cap rate compression having somewhat “peaked” and higher capital needed to future-proof assets, we believe an appropriate strategy is for landlords and developers to consider evaluating their current capital structure to maximise returns. These strategies could involve holding a more efficient capital structure (i.e. a restructuring into a stapled security or seeding a REIT) or tapping capital partners, which could release funds back to shareholders or be re-invested into other opportunities with higher return potential.
Developers “lightening up” on assets.
- Read more at SGinvestors.io.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Derek TAN DBS Group Research | Tabitha FOO DBS Group Research | https://www.dbs.com/insightsdirect/ 2024-10-17
