Penny-pinching: Keppel Land dodges from bidding

Keppel Land was a notable absentee at the bidding for the 2.2ha residential site beside its property The Luxurie.

Analysts have noticed that Keppel is refraining from actively bidding for land in Singapore and China. Is it holding off until global uncertainties subside?

Meanwhile, three new projects in China are set for possible launch in 2H12 -- the Nanxiang project in Shanghai, Park Avenue Heights in Chengdu and The Lakefront Residence in Nantong. 

Here's more from Maybank Kim Eng:

Keeping its powder dry. Despite sitting on a healthy cash hoard of approximately SG$1.6b, Keppel Land has not been actively bidding for land in Singapore and China. It seems to be keeping prudent amid global uncertainties, focusing first on clearing its inventory and bidding for attractive sites only if they become available.  

Absent from Sengkang tender. The tender for a 2.2ha residential site beside KepLand’s The Luxurie at Sengkang Square closed on 31 May, drawing five bids in all. KepLand was a notable absentee among the bidders. The top bid of SG$383.3m translates to SG$527.6 psf ppr, 5% higher than KepLand’s land cost for The Luxurie, which may then lend support to The Luxurie’s current ASP of SG$1,000 psf.

Monitoring the Chinese market. In China, KepLand has earmarked three new projects for possible launch in 2H12, depending on market conditions. They are the Nanxiang project in Shanghai, Park Avenue Heights in Chengdu and The Lakefront Residence in Nantong. As various cities continue to fine-tune policies to support end-user demand, KepLand will do well to time its launches to coincide with the seasonal peak periods, such as in September/October.

MBFC Tower 3 divestment likely to be deferred. MBFC Tower 3 had obtained its TOP in 1Q12 with a committed leasing rate of 67%. KepLand will likely now bide its time to sell its one-third stake valued at SG$1.0b to K-REIT Asia, until it is able to raise the commitment level to above 90% and until more RNAV-accretive acquisition opportunities surface for its capital to be redeployed.

Plenty in reserve. As uncertainties continue to plague global markets, KepLand is in a position of strength to navigate through the medium-term volatilities and possibly pick up attractive assets for future growth, which could be a positive catalyst.