We expect a short and sharp V shape recovery in the Singapore residential market. We forecast a 20% price increase from trough (2Q09) to end 2010, supported by positive net cost of carry. Post 2010, we are less positive on the long term sustainability of the market given pending supply issues. Nevertheless, while QoQ price growth is improving, we expect share price to trend higher.
We maintain our view that the office market has entered into a multiyear downturn premised on the huge amount of new supply. We think net absorption will turn positive only in 2012 signaling a trough in 2011. However, given that KPLD has addressed funding concerns for its development commitments, we think that potential downside is already reflected in the share price and our valuation.
KPLD remains our least preferred property developer due to its high exposure to development office assets. Despite this, we highlight that the stock has historically traded with a high correlation to both the physical residential market and other large cap Singapore property developers. Given our overall positive stance on the sector, we do not expect the stock to underperform at this point in the cycle.
Sponsored Links
Comments
No response to “Keppel Land - Office is heading for a multiyear downturn”
Post Comments (Atom)
Post a Comment |
Post a Comment