Adding Keong Hong to portfolio on improving market sentiment

SINGAPORE (July 17): The property market continues to improve, with a consortium led by Chip Eng Seng Corp putting in a record bid of $1,110 psf per plot ratio at the new Bidadari Estate. A joint venture (JV) involving Keppel Land and Wing Tai had the second-highest bid, just $9 psf ppr lower. In a July 12 report, DBS Group Research says that the tight-winning margin of 0.8% and the large number of bidders — 15 — indicates that competition for land sites is strong. “Interestingly, local developers’ bids are more aggressive now at above $1,000 psf,” the bank adds.

Maybank Kim Eng Research analysts, meanwhile, highlight that strong capital flows were a recurring theme at the recently concluded Real Estate Developers’ Association of Singapore’s property market update seminar. In a July 10 report, analysts Derrick Heng and Chua Su Tye write: “Market sentiment has improved significantly year to date, helped by strong system liquidity, and robust [record] bids in recent government land tenders. These themes, we believe, together with the abating supply across the various subsectors, and supported by new economy demand drivers, continue to reinforce the investment theses for the developers and S-REITs.”

Positive property market sentiment
All this should bode well for the property holdings in our portfolio, UOL Group and CapitaLand. DBS says in its report that activity in the Bidadari area should be positive for UOL’s Raintree Gardens site, which is close by. UOL had acquired this site in an en-bloc deal last year.

---

Related Stories

• Awaiting catalysts: China’s post-reopening recovery has disappointed but experts see better prospects ahead
• BYD: Tesla-beater builds up stronger position amid competition
• China Railway Construction: Undervalued giant chugs ahead; seen to be more selective

---