Developer launches reached new high. In March, developers released a record-high 3,489 homes for sale. This came barely a month after they had significantly held back new launches in February, when they sat out and assessed the impact of the seventh round of cooling measures effective on 12 Jan. As a result, the number of new homes sold in March clocked in at 2,793 units (excl. ECs), slightly more than the last peak of 2,772 homes in July 2009. Including ECs, the number of homes sold in March 2013 would be an astounding 3,072 units.

Buyers flocked to D’Nest. CDL’s 912-unit D’Nest achieved the best sales, with 699 units sold at a median of SGD963 psf. This was followed by CDL’s other project, the 868-unit Bartley Ridge, where 367 units were sold at a median price of SGD1,296 psf. Together with sales of balance units mainly at H2O Residences, Echelon and Hedges Park Condo, CDL had the largest market share for the month, accounting for 38% of all sales (incl. ECs).

Mass market projects continued to dominate sales. Other new launches that did well included Fragrance/Aspial’s Urban Vista (348 units sold; median price SGD1,503 psf), Tuan Sing’s Sennett Residence (238 units sold; median price SGD1,474 psf) and Sim Lian’s Hillion Residences (191 units sold; median price SGD1,340 psf). In total, 2,093 homes were sold in the Outside Central Region (OCR), accounting for 68% of all sales including ECs.

Not quite shoeboxes, but smaller units still in vogue. More than half of the available units at each of the top five selling projects were less than 1,000 sq ft each, with the exception of D’Nest (47% of the units). We reckon that developers were largely catering to the “sweet spot” of SGD1.5m per apartment. However, it would appear that investment demand remains fairly high, considering that owneroccupiers would anecdotally tend to prefer more spacious units.

Policy risks remain high. The strong resurgence in new home sales barely two months after the last round of cooling measures certainly implies that policy risks remain high, particularly when the Singapore economy experienced a worse-than-expected -1.4% QoQ contraction in 1Q13, based on the government’s advance estimates. Further measures could include i) mandating a Mortgage Servicing Ratio of 30% for all new private home loans; ii) further tightening the LTV ratios for third and subsequent home purchases; and iii) capping the use of CPF funds for downpayments.

Stick with retail and situational plays. CapitaMalls Asia (CMA SP) remains our top sector pick for its retail mall exposure. We also maintain our BUY recommendations on CapitaLand (CAPL SP), Keppel Land (KPLD SP) and OUE (OUE SP) for their diversified businesses and potential divestments. We maintain SELL on CDL (CIT SP) as we believe its valuations are rich despite the impressive sales in March.

Source: Maybank Kim Eng Research - 16 Apr 2013