Property sales will see an uptick with upcoming launches by UOL and Guocoland in the second and third quarters of the year, say DBS Group Research analysts Derek Tan and Rachel Tan.
The analysts’ May 23 flash note comes on the back of strong sales reported at the launch weekend of Liv@MB along Arthur Road.
Located in District 15, Liv@MB, formerly Katong Towers, sold 236 units out of 298 units over the launch weekend, recording a 79% sell-through rate.
Average pricing for the project is $2,400 per sq ft, ranging from $2,350 psf for bigger units to $2,600 psf for smaller units. Prices averaged $1.3 million for a 1-bedroom unit to $1.8 million for a 2-bedroom unit, with the larger 4-bedroom units going for $3.7 million.
DBS analysts estimate that the actual launch prices were about 5% higher ahead of media-reported preview prices.
Developer Bukit Sembawang timed the launch well, writes DBS, while the project’s strong attributes attracted buyers. “We believe that the lure of staying in the East and improved connectivity of Liv@MB to the Central Business District and Orchard are key attributes that attracted buyers to this project.”
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Liv@MB is located 200 metres from, or a 10-minute walk to, the upcoming Katong Park MRT, a station along the upcoming Thomson East Coast Line, which is expected to open in 2H2022 or early 2023. “The timing of the launch probably captured buyers’ attention as Liv@MB was the only major project that was launched over the weekend,” they add.
DBS is recommending “buy” on Bukit Sembawang with a target price of $5.92. The developer snagged the site via an en bloc of the former Katong Towers for $345 million back in 2018 at an estimated all-in land price of $1,280 psf and an estimated breakeven of $1,850 to $1,900 psf for the project.
DBS estimates a net margin of 25%-28% and a $0.40 accretion to NAV (up 7% from the latest reported NAV of $5.61) upon completion of this project.
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Attractive attributes wanted
Despite macro uncertainties and the risk of rising interest rates, property buyers are back for projects with attractive attributes as seen in the recent take-up at Piccadilly Grand (77% sell-through rate at launch) and Liv@MB, say DBS analysts.
“While the split between foreigners and locals was not revealed for Liv@MB, we believe that the majority of sales was from pent-up demand from Singaporeans, especially upgraders or singles looking for their own abode. The robust sell-through rates of projects in May and overall transaction velocity are expected to show a pick-up after the lull from January to April,” they write.
Next to watch will be the upcoming project launches of AMO Residences at Ang Mo Kio Avenue 1 by UOL (372 units) in late-June and Guocoland’s Lentor Modern (605 units) in 3Q2022, which may set the tone for the property market’s direction for the rest of 2022.
Shares in Bukit Sembawang closed 6 cents higher, or 1.17% up, at $5.17.
Photo: Bukit Sembawang Estates
