S'pore residential property prices to rise 30% by 2008: Citigroup
By Daryl Loo, Channel NewsAsia | Posted: 23 April 2007 2042 hrs


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SINGAPORE : Home prices in Singapore are expected to rise much more than those in Hong Kong, over the next two years, according to Citigroup.

Speaking at an Asia Pacific property conference in Singapore on Monday, Citigroup analysts say they see Singapore residential prices jumping by as much as 30 percent by 2008 compared to just 10 percent for Hong Kong.

Price tags for private homes in Singapore will be on the rise for at least the next two years, according to Citigroup.

It sees Singapore as being in the early stages of a cyclical upswing.

This is in contrast to Hong Kong, where the cycle is on the downtrend - and expected to end by 2009.

They say that Singapore prices are being driven by high occupancy rates, which have hit a record peak of 95.7 percent, and set to even climb higher over the next two years.

Wendy Koh, Director, Asia Pacific Equity Research, Citigroup, said: "If you look at the residential sector, occupancy rate right now is about 93.9 percent as at the end of 2006. If we take into account the completion this year which is only about 5,000 units, and last year's demand was about 9,000, and on annual basis the last 10-year average was about 8,000, occupancy rates should continue to rise.

"And if you take into account the 3,500 units that were sold en bloc last year, occupancy rate is actually closer to 95.5 percent last year. That is a record high as we have not seen that sort of levels before."

Citigroup expects occupancy to rise further to 96.8 percent this year, and 97.1 percent in 2008, as the level of demand far outstrips supply.

Over in the office sector, it is predicting rentals to rise 56 percent to $18.50 per square foot by the end of 2008, up from $11.80 currently.

And despite the recent run-up in property counters, Citigroup sees further upside in some choice picks.

Ms Koh said: "We like City Developments, Wing Tai, Allgreen. We also like Keppel Land for office play. For the first three stocks, it's more the residential exposure. If you look at City Dev and Wing Tai, they have been replenishing their land bank, and riding the upswing in the residential market."

Private home prices in Singapore rose 10.2 percent last year, and an estimated 4.6 percent in the first quarter of this year. - CNA/ch