Investors unanimously bearish on Singapore property: CIMB

Bleak market outlook adopted as steep price declines hit the residential sector.

The office sector will also feel the price pinch as financial firms downsize in 2012. Singapore developers with China exposures are even doubly at risk.

As a result, investors are fleeing to defensive hideouts like S-REITs. What other stocks are gaining traction in this declining property market?

Here's more from CIMB:

Investors generally preferred S-REITs to developers with the retail and industrial segments being the favoured hideouts. Stocks drawing the most interest were GLP and CDLHT – Outperforms. Stock ideas which met the most resistance were AREIT and CMA. Maintain Underweight.

Bearish throughout. Investors’ views on the SIN residential market were unanimously bearish. Many are looking for physical prices to decline this year. Much of the focus was on the impact of the Additional Buyers’ Stamp Duty (ABSD), with many surprised at the extent to which foreigners account for current take-up. Many were interested to know what could trigger the price decline. We believe a softening secondary (sales and rental) market could lead this cycle. Investors also appeared less sanguine on the office sector, highlighting rising job cuts in the financial sector. While the FSTRE has underperformed the broader market by 10% since Jan 11, investors appeared unconvinced on trades.

China worries. Some believed that SIN developers with meaningful exposure to China are unlikely to do well this year as price cuts are only just beginning. Our channel checks with several China developers corroborate this; cash flows are now their top priority. While well-capitalised, we believe SIN developers in China will bear the derivative brunt of declining prices and volumes. Investors agreed that China could pose another source of RNAV (and earnings) downgrades.

Feedback on stock ideas. Our key calls of GLP and CDLHT received the most positive feedback with some resistance to our views on AREIT (O) and CMA (U). Most had no issues with our calls on CityDev (U), CapLand (N) and KepLand (U).

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