Singapore Property: July 09: Residential Tracker

[EyeSpy]

Report from Morgan Stanley. Care to refute this?

Quick Comment: July primary market volumes increased by +51.6% MoM versus the +9.4% MoM seen in June, to set a record in terms of the highest number of primary transactions set in a month since January 2002. However, preliminary data suggest that secondary market transactions declined by 35.6% MoM in July after a strong increase in June. However, given the time lag in lodging the caveats for transactions in the secondary market, it is too premature to interpret the decline negatively. The primary market overall median selling price increase continued in July for RCR and OCR regions with a +7% and +3%, respectively, while the CCR region saw a -3% decline in median pricing. Our tracking of several high-profile residential projects in the primary and secondary market suggests transaction prices continue to rise in July from April.Considering the upside risk of an asset bubble due to the excess liquidity, we recently stretched our bull case further to a super bull case scenario. The latter not only assumes a V-shaped residential price recovery back to the 2008 peak levels, but also assumes higher sales take-up rates as residential launches are brought forward. Despite the difficulty in seeing an improvement in the non-residential segments, in this scenario, we have optimistically assumed that their valuations will fall no further from current
levels. From this analysis, our super bull case suggests that Wing Tai and Allgreen offer the most upside. Amongst the big cap developers, we prefer the25% upside offered by CapitaLand vs. CDL’s and KepLand’s 17% and 34% upside, respectively, given the less favored office exposure.Our base case thesis is that previous premiums to NAV and BV valuations experienced in 2006-07 are
difficult to justify in this cycle, as, at present, the only bright spot appears to be the residential segment. Our price target, which assigns a 30% probability to our bull-case NAV, attempts to capture the possibility that our base residential assumptions may be conservative.
 
Copyright 2009 Morgan Stanley

[theonlything]

The only minor thing wrong is that URA data tracked the peak of the cycle in mid 2008 however actual volumes and prices started falling in the secondary market (luxury uncompleted projects) in July 2007.  Otherwise bang on.