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Singapore Property Kaki

A place for sharing property, investments and financial management ideas among kakis

Weekly Kopi Talk (27/1/18 – 2/2/18)

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1st Feb 2018 – Singapore an emerging hot market for private equity real estate funds

SPK: Good and bad piece of news for Singapore office REITs. If CBRE’s projection turns out to be correct, more funds will flow into Singapore, resulting in more transactions in Singapore office market. This is likely to push up office property prices and resulting in further yield compression. It is good for raising the capital value of the office assets that Singapore office REITs are already holding. However, as it is today, yield compression of office assets has made it more challenging for S-REITs to acquire yield accretive office buildings in Singapore without income support and many office REITs have already turned to overseas like Australia to acquire assets that more yield accretive. The influx of funds into Singapore office properties will make it even harder for Singapore office REITs to acquire office properties in future, resulting in slower AUM growth.

 

1st Feb 2018 – Singapore property rebound has Frasers’ CEO chasing more land

SPK: Frasers Property managed to replenish its Singapore landbank last year by acquiring the site at Jiak Kim Street for close to S$1 bil, a record psf price at a government land sale. According to the report, Frasers is still in a land acquisition mode but on the contrary, Frasers did not participate in the recent Government Land Sale tenders. I believe that Frasers’ land acquisition strategy is to acquire sizeable plots of land at selective districts for development. Land acquisition will be a key driver of property developer’s share price in the near future.

 

31st Jan 2018 – Multiple tender closings, but bids still bullish

SPK: Intention of batch tender exercise is to give developers more options in site selection and to balance the supply and demand. But it appears that developers still remain very hungry for land. CDL and its parent company – Hong Leong Group, put in separate bids for the sites at Handy Road and West Coast Vale. Kheng Leong, the real estate arm of UOB’s Wee family, also participated in 2 tenders – Handy Road and Chong Kuo Road sites. There were several big developers also took part in the tender for Handy Road site, including an unidentified group from Hong Kong, Cheung Kong, and Wing Tai. This is a reaffirmation of the consensus outlook on the recovery in the high-end property segment. Read my earlier blog post on the GLS tender here!

 

30th Jan 2018 – Bullish Investors look past failed bid by CDL to privatise M&C Hotels

 

SPK: City Developments failed in its attempt to buy out Millenium & Copthorne Hotels, but its share price rose 1.97% to S$13.45 on Monday. CDL has always been a proxy to Singapore property market due to high concentration of assets in Singapore. CDL’s share price performance had been driven primarily by the recovery in Singapore property market. This is evident when we compare the share price performance of Capitaland and CDL. Capitaland has a more diversified geographical exposure and for the year-to-date, its share price is up by 14%. On the other hand, developers with significant Singapore exposure, such as CDL and Bukit Sembawang have experienced a greater jump in share price of 45% and 38% respectively.

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