SINGAPORE (Feb 16): The property market could be on the cusp of recovery.
Residential property sales volume grew 9% in January despite a 26% lower number of new launches.
While secondary transactions remained flat, primary sales rose 18% y-o-y.
Total sales volume for private homes and executive condominiums grew by 8% and 15%, respectively.
"While there were no exceptionally large sales by any project (partially due to the absence of new property launches), the sales volume for each project was moderate," says DBS Group Research lead analyst Rachel Tan in a Wednesday report.
With a number of new launches expected in first half 2017, Tan says the "sales volume and take-up rates of these new launches would be a good gauge to see if the improvement in sales volume is sustainable."
Meanwhile, all eyes are on the Singapore Budget 2017 announcement scheduled for Feb 20, which could potentially see the introduction of policies to stabilise the property market.
DBS's top picks as "proxies to a potential pick-up in the Singapore property market" are City Developments (CDL) and UOL Group.
"The recent newsflow on potential M&As has lifted the share prices of most property developers," says Tan, adding that CDL and UOL could see re-rating following any M&A.
DBS has "buy" calls on both CDL and UOL, with target prices of $9.90 and $7.20, respectively.
As at 12.23pm, City Developments is trading 15 cents lower at $9.20, while UOL Group is down 10 cents at $6.57.