New private home sales doubled MoM in May 2014, with 1,470 units (excluding ECs) sold vs. 1,790 units launched, making it the best-performing month since May last year.

Demand was not broad based. Top five projects made up 78% of total sales (excluding ECs). Coco Palms was the best-selling project with 590 units sold (median price SGD1,018 psf).

Despite the much improved sales, we expect sector headwinds to remain as sales at new launches taper off after the initial fervour. Maintain NEUTRAL.

Sales increased as more units released

The 1,790 units released for sale by developers in May 2014 was the highest since Sep 2013. The most prominent launches were Coco Palms (600 units released) and Commonwealth Towers (400 launched, 275 sold, median price SGD1,626 psf). After lowering ASPs at The Panorama by ~10%, Wheelock sold another 100 units at a median price of SGD1,241 psf. Notwithstanding, the project remains 78% unsold.

New launches that failed to excite included The Rise @ Oxley (120 units launched, eight sold, median price SGD2,452 psf) and Singa Hills (58 units launched, two sold, median price SGD1,210 psf).

What’s Our View

The upcoming launches in the pipeline include M+S Pte Ltd’s Marina One (1,042 units), KepLand’s Highline Residences (500 units) and Wing Tai’s The Crest (469 units). All three projects are likely to be priced in excess of SGD1,500 psf, suggesting that sell-through rates may be uninspiring.

YTD sales of 4,010 units (excluding ECs) were just half of last corresponding period’s. Given higher price points of upcoming launches, May’s robust demand is unlikely to be repeated. We thus cut our full-year new home sales projection by ~30% to 9,000-10,000 units (from 13,000-14,000 units). On the back of expectations for extended dovish monetary policies, we roll-over our ASP projections from a 10% decline in 2014 to a 10-15% decline from mid-2014 to end-2015.

Nonetheless, our NEUTRAL stance on the Singapore residential property market remains as developers continue to de-risk their exposure to this segment. We reiterate our view that the cooling measures are likely to stay amid the low interest rate environment. Our top picks are CapitaLand (CAPL SP, BUY, TP SGD3.88) and Keppel Land (KPLD SP, BUY, TP SGD4.60) for their diversified portfolios.

Source: Maybank Kim Eng Research - 17 Jun 2014