Investors await right time to grab profits in property market

Analysts said investors can bank on returning foreigner demand, which was seen in 60% of New Futura's sales so far.

Singapore property unit sales (primary and secondary sales) jumped by 14% YoY to around 3,200 units. Moreover, transaction values were significantly higher by 46%, driven mainly by the secondary market, indicating high sales momentum. DBS Equity Research thinks this growth could be boosted further and that transaction values can exceed +10% YoY.

Despite this growth, property investors are still hungry for proxies as the market has just started catching the fever, DBS Equity Research said. According to a report, whilst property developers remain fairly well owned, most feel that it is “too early” to be taking profit in light of expected positive catalysts and data-points.

The Singapore property market has more room to grow. DBS analyst Derek Tan noted that following on from the momentum in 2017, there was another $5b worth of en bloc sales so far in 2018 and there is more in the pipeline. “Developer appetite for landbanking remains strong and there is still a significant number of sites available for purchase. We believe developer appetite will turn selective especially on the back of a pick-up in the supply pipeline, estimated at 30,000 units to be launched over 2018-2019,” he said.

Moreover, foreigner demand is just returning. Even if the New Futura (48 units sold out of 64 units) is the only major project launched so far in 2018, sales momentum has been “surprising” strong for a luxury residential project, with close to 60% of the units sold to foreigners despite the high outlay.

Tan said, “Looking ahead, developers are lining up project launches in the coming months. Starting with The Tapestry (City Development) and Rivercove (Hoi Hup Sunway), we estimate close to 10 projects with c. 2,583 units in total will hit the market in the coming weeks, and a further 15 projects (c.9,000 units) thereafter. Strong pre-sales from these projects will be strong catalysts to drive developer stocks higher, in our view.”

Home vacancy rates in Singapore rose to elevated levels or above 8% as a growing number of homebuyers and developers are selling their properties in the hopes of cashing in on the latest sale frenzy to grip the housing market. Vacancy rates are even higher at 11% in the Core Central Region in Q4 as homebuyers pin their hopes on the recovering property market to absorb the properties they put up for sale.