Malaysia & Singapore Real Estate

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Singapore property prices continue skywards in Singapore and on Sentosa (see our cover story this week Singapore’s Riviera of the East, Issue 428, Jul 5-11). On Jul 1, the Urban Redevelopment Authority www.propertysingaporehdbcondo.com (URA) released the flash estimates of the property price index (PPI) for 2Q10 which indicated that Singapore property www.buysellrentcondo.com prices are above their 1996 peaks.

According the URA flash figures, 2Q10 saw a broad-based increase in prices for all segments of the market. Overall PPI is up 5.2% q-o-q to 184.1pts, compared with a growth of 5.6% previously. The index is now above the previous peak level of 181pts seen in 3Q96. The largest price increase in the quarter was recorded in the mass-market regions while the core central region saw a 5.1% q-o-q growth.

Citi is expecting rental and resale prices in in the mass-market segment to rise by another 5–10%, but warns that policy risk remains in this segment. The biggest positive factor is liquidity and the record-low mortgage rates, Citi says. “With mortgage rates at below 2% and unlikely to rise significantly in the next 6 to 12 months, this would help mitigate any significant downward price pressures in the high-end segment.”

Preferring to err on the side of caution, Citi is recommending the low-risk S-REITs over developers “given the increasingly unfavourable risk/reward ratio”. Among the developers, its top pick for the sector is CapitaLand for its attractive valuation and diversified portfolio followed by hold recommendations for CapitaMalls Asia and Keppel Land because of their limited exposure to Singapore residential property. Citi has sells on City Developments and Allgreen Properties which are skewed towards residential segment. It likes the REITs most, and its favourites are Ascendas REIT, CapitaCommercial Trust, Suntec REIT and Mapletree Logistics Trust.

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