Don’t get carried away by ‘pickup’ in luxury home sales

SINGAPORE (Sept 23): Nomura is not getting itself all excited over the recent pickup in Indonesian purchases of luxury homes in Singapore and prefers to remain selective on the stocks of residential developers.

“We think it is too early to be bullish given the pick-up is off a very low base in 2014-15, and the overall luxury market is in fact still relatively slow,” says analyst Sai Min Chow in a Thursday report.

Sai’s top pick among residential developers is CapitaLand with a target price of $4.05 implying a potential upside of 29%. This excludes the CY16F yield of 3.5%, which Sai thinks is “relatively attractive” for a developer.

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