Near-term silver lining for property stocks

ALTHOUGH Budget 2016 offered no relief for developers wishing for a tweaking of property cooling measures, there are still potential near-term catalysts for property stocks. Many developers are looking to restructure their residential property portfolio through structured deals or bulk sales. Opportunities also exist for some to undertake divestments of mature commercial assets.

These possibilities present re-rating opportunities for property counters - particularly so as many property developers are trading at 30-40 per cent discount to revalued net asset value. From a valuation perspective, it may well be time to look at some undervalued property stocks rather than shun the cluster altogether.

No doubt, this year will remain challenging for property players as oversupply and anaemic demand plague all segments of the market. In the near-term, space supply in the retail, office, and industrial segments will weigh on rents and occupancies while developers are staring squarely at a peak supply of 21,906 private residential units due to hit the market this year.