1H11 government land sale programme – neutral for residential, positive for office and hotels

 While the government released another aggressive land sale

programme for 1H11, with a total residential supply of 14,300

units, 3% above the record 13,900 units in 2H10, the confirmed

list was similar to 2H10’s 8,125 units. This suggests the

government does not want prices to collapse from oversupply.

● Nonetheless, we believe the government is set to issue more

demand-side measures, should mass market and HDB prices

continue to escalate. More measures include stamp duty, capital

gains tax, lowering LTV further and raising cash component.

● The GLS remains more supportive to office asset values, as only

one new CBD site was put on the Confirmed List, that could yield

about 280k sq ft NLA. In the longer term, more supply is expected

from the six plots at Marina Bay and Ophir/Rochor Road under the

recently concluded agreement with Malaysia. These could yield

over 5 mn sq ft GFA of office space but will only kick in after 2015.

● Two new hotel sites are made available, albeit via the Reserve List,

pointing to low risk of oversupply. We remain positive on the office

and hospitality proxies: OUE, CDL, CCT, KREIT and CDLHT.

 

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