Oxley rallies to be Singapore's largest home vendor

It accumulated 4,000 units worth $5b, beating City Developments' house stock.

Following aggressive landbanking in the past year, Oxley Holdings and its partners have obtained an inventory of over 4,000 units worth a combined gross development value (GDV) of $5b. According to Maybank Kim Eng, it now has the largest housing stock in Singapore.

Maybank Kim Eng analyst Derrick Heng added that Oxley has leapfrogged City Developments, the de-facto housing proxy, by stock count.

As a result, Oxley is expected to benefit from the high interest in the housing market. “With improving sentiment in the housing market, we expect developers to sell 12,000 private homes this year, up 13% over the 10,600 sold in 2017. We expect Oxley to capture a sizeable part of this demand, which could potentially bump up its market share of completions from 1.7% since 2012 to almost 8% over the next five years,” Heng added.

The analyst noted that Oxley was early in positioning itself for a rebound in Singapore’s residential market. “It started acquiring sites in mid-2017. Its well-timed acquisitions have given it a considerable land-cost advantage,” he said.

Some of its remarkable acquisitions were Rio Casa and Affinity At Serangoon, two of its largest sites which were acquired at land rates of $706 and $835 psf respectively. “Land prices in the Serangoon, Hougang and Bidadari areas have since moved up significantly,” Heng added.

Lower land costs should allow the company to price its products competitively for quick turnover. Heng said, “Transaction volumes have picked up across the board in the past year, with improving sentiment. The velocity of sales has been the strongest in the $1m-1.5m price range.”

With 8,500 units or 35% of transactions last year in this price range, this could be the sweet spot in the market. “Our calculations indicate that Oxley’s average selling prices (ASP) are $1.1m-1.4m, which sit nicely in this range,” he added.

Moreover, the launches of its Singapore residential projects could narrow its revalued net asset value (RNAV) discount, as it would likely crystalise about 10 cents per share of development surplus. “Whilst profit margins may not be maximised by selling out quickly in an upcycle, a developer can speedily lock in profits, thereby reducing its development risks. Furthermore, it can pare down debt with presales proceeds to reduce gearing, saving financing costs,” Heng concluded.