The property market cannot sleeep forever, right? Not Singapore's.
Its awakening is gathering strength.
On this page, we excerpt the insightful take of Deutsche Bank (19 Oct 2017 report) and share our own report on insider buying at three property developers.
Excerpts from Deutsche Bank report
The squeeze in the next 12 months
S$6.3bn of en-bloc transactions have taken place in the market since the middle of last year, which will see the removal of 2,889 units. A further S$19bn projects are estimated in the pipeline, which could see a further 8,553 units at risk of being taken away. This, together with the declining completions over the next 2 years, creates a perfect squeeze that will likely significantly improve the pricing power for sellers and landlords.
In fact, we believe that the near-term squeeze could be stronger than the market anticipates and could trigger a return of the ‘herd instinct’ to the property market. Recall that the 2005-07 en-bloc cycle saw a total of S$22bn transactions, removing c.14,000 units.
Caveat emptor – population growth is the key swing factor
The supply will return to the market eventually. The current en-blocs will add c.11,000 units from 2020 onwards. URA has highlighted potential zones for future development, including at least 91,000 residential units in the long run.
That said, population growth remains a key swing factor. Our base case assumes 1.2% population growth, half of the LT average achieved in the country over the history. Should that growth return to the LT average, we would see demand for 93k units of housing, which would well contain the risk of oversupply in our view.
Insider and fund buying at 3 developers whose stock prices at now at, or near, their 52-week highs:
→ Sing Holdings: It will soon start sales of its Parc Botannia condominium in Sengkang.
Independent director David Ong bought 100,000 shares at 48.25 cents apiece on 13 Oct 2017 and another 100,000 shares at 47.5 cents three days later.
With that, he raised his stake to 300,000 shares.
His purchases prices are at a discount to the NAV of 64 cents and RNAV of 91 cents a share. (See: SING HOLDINGS: Deep Value Property Play with Imminent Catalyst)
Far earlier to recognise the value of Sing Holdings, especially after it won a tender for the site at Sengkang, was Azure Capital.
Back in April 2017, Azure was reported to be a shareholder. The stock traded at around 36 cents then (See: Azure All-Star Fund buys AVI-TECH, FU YU, KSH, SING HOLDINGS, PEC ...)
|Hiap Hoe owns the Ramada Singapore hotel and Days Hotel at Zhongshan Park in the Balestier area. NextInsight file photo→ Hiap Hoe Ltd: A new substantial holder has emerged: Mr Gui Boon Sui, the chairman of Regency Steel Asia Pte Ltd, which is majority owned by Mitsui & Co.
His stake reached 5% (23,573,650 shares), worth about $21 million, on 10 Oct.
Another major buyer, in 2016, was Hiap Hoe CEO Teo Ho Beng, who bought 14.9 million shares through two married deals in May and July at 70 cents a share.
His stake, direct and deemed, amounts to 345.7 million shares , or 73.5%, currently.
|Oxley's hotel (Novotel) on Stevens Road opened early this month (Oct) while its adjacent Mecure Singapore will open at end-2017.
→ Oxley Holdings: Its 22,745,400 treasury shares were sold, through Maybank Kim Eng Securities Pte Ltd on 17 Oct, to approximately 34 investors.
They comprise prominent investors such as Asdew Acquisitions, Island Asset Management, ICH Capital as well as corporate and individual investors.
The share sales were transacted at S$0.59 per share, rasing about $12.95 million in net proceeds for Oxley.
Oxley is a key beneficiary of the current Singapore property upcycle, as it has the largest residential landbank (2,833 units and S$3.03b gross development value) among Singapore-listed property stocks.