Sky Eden, Lentor Modern will test market; CDL, GuocoLand among top property picks: DBS
Yong Hui Ting
STRONG sales momentum for the latest 2 launches in the residential market — Sky Eden @ Bedok and Lentor Modern — will likely result in a further squeeze in supply and drive average pricing higher in H2 2022, albeit at a modest pace, said DBS in a report on Thursday (Sep 8).
The 2 developments will be looking to “test the market” with an indicative pricing of S$2,000 per square foot (psf) onwards. If and when achieved, this would set a new benchmark for projects in the Outside Central Region, the analysts said.
The target estimates have already been reached for Sky Eden, when developer Fraser Property announced early on Thursday that nearly 75 per cent of the 158-unit project has been sold with an average price of about S$2,100 psf.
Commenting on the outlook for Sky Eden, the analysts said: “Sky Eden @ Bedok seems likely to see strong buyer reception given its location within an established town centre in Bedok and being the first launch in the location in 10 years.”
The research house also views GuocoLand’s Lentor Modern as an attractive project on the back of the gradual opening of the Thomson-East Coast Line, which will improve the site’s connectivity to the Central Business District.
The analysts estimated an up to 1.2 per cent accretion to GuocoLand’s revalued net asset value (RNAV) for every S$100 psf gain above the projected S$2,000 psf for the project.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
DBS reported good optimism for developers despite concerns of a residential slowdown given macro uncertainties. The group thinks such fears will likely be negated by strong pre-sale results that would shield these developers from net asset value (NAV) or RNAV downgrades.
In fact, investors may even expect stronger earnings and an NAV upgrade among property developers, driven by strong commercial and hospitality portfolios.
Its top picks for the sector include City Developments Limited (CDL) and GuocoLand , which were selected over their “attractive valuations” at 0.9 times and 0.5 times price to NAV ratio, respectively.
On top of a robust pre-sale, catalysts for the 2 property plays could also come from a rebound in operational metrics for their hospitality and commercial portfolios, said DBS.
Shares of CDL were trading up 0.6 per cent or S$0.05 at S$8.33, while GuocoLand’s shares gained 2.3 per cent or S$0.04 to S$1.75 as at 11.55 am on Thursday.
Copyright SPH Media. All rights reserved.
