Opportunistic buyers eager to snap up undervalued property assets

Developers are keen to divest, too.

With property stocks trading at unjustifiably low valuations, analysts at Maybank Kim Eng believe that the property sector might see a wave of divestments in 2016.

“We think that developers may look for ways to generate shareholder returns through asset disposals in 2016. Depressed valuations are also likely to attract buyers,” said Maybank. 

In particular, the report noted that City Developments divest more properties, similar to its Profit Participation Securities (PPS) scheme in 2014 and 2015. The divestment of its Sentosa assets via PPS unlocked $1.4b of value for shareholders.

“Since then, it has been on the lookout for similar deals. We expect the market to take any progress positively, as it would likely book handsome gains on assets conservatively held at cost,” said Maybank Kim Eng.

Another developer which might be keen to sell assets is Ho Bee, which might divest its $1.58b office asset in Buona Vista.

“Unlike prime office assets that face an impending supply glut, we believe The Metropolis could benefit from: 1) further office decentralisation; and 2) Jurong’s development into the next major commercial centre,” Maybank Kim Eng said.