Overview of Singapore’s Property Market

The Singapore property market witnessed a dynamic close to 2024 and is poised for a robust start in 2025. Sales of private homes, excluding executive condos (ECs), fell by 92% month-on-month but rose 50% year-on-year in December 2024, with 203 units sold. For the entire year, 6,606 units were sold, down 1% year-on-year but aligned with the upper range of annual forecasts.

Momentum is expected to carry forward into 1Q25F, driven by the launch of major projects like The Orie (777 units) and Parktown Residences (1,195 units). With a projected sales volume of 6,000-7,000 units for 2025, the sector remains Neutral in rating, reflecting both opportunities and potential challenges.

Key Players in Singapore’s Property Market

The report provides a deep dive into prominent companies in the sector, offering insights into their performance, valuation metrics, and future potential. Below is a detailed analysis of each company covered in the report.

Capitaland Investment (CLI)

Recommendation: Add

Target Price: S\$4.30

Current Price: S\$2.50

Capitaland Investment (CLI) stands as one of Asia’s largest real estate investment managers. Its growth is underpinned by an increase in funds under management, efficient capital deployment, and improved operational performance in its investment and lodging properties.

The stock is trading at a 48% discount to its revalued net asset value (RNAV) and offers a dividend yield of 4.8%. CLI’s price-to-earnings (P/E) ratio for FY24F is 13.31, dropping to 12.69 by FY26F, while its price-to-book value (P/BV) is projected at 0.89 for FY24F and 0.79 by FY26F. This favorable valuation, combined with potential ROE expansion and share price re-rating, makes it a top pick in the sector.

City Developments (CIT)

Recommendation: Add

Target Price: S\$8.97

Current Price: S\$5.06

City Developments (CIT) is well-positioned to benefit from its active land restocking activities and a robust launch pipeline for 2025. This extends the visibility of its residential earnings. Additionally, value-unlocking initiatives and a recovery in the global hospitality industry are expected to act as catalysts for its share price.

The stock is trading at a steep 69% discount to its RNAV of S\$16.30, with a P/E ratio of 10.92 for FY24F and 10.59 by FY26F. Its P/BV is projected at 0.45 for FY24F and 0.42 by FY26F, with a dividend yield of 2.37% consistently over FY24F-FY26F. These metrics highlight significant upside potential, making CIT a strong contender for investors seeking undervalued opportunities.

UOL Group

Recommendation: Add

Target Price: S\$8.20

Current Price: S\$5.10

UOL Group boasts a high recurring income base, supported by rentals, hotel operations, and investment holdings. Its office exposure through Singapore Land Group adds further stability to its portfolio. Trading at a 63% discount to its RNAV of S\$13.66, UOL offers substantial value for investors.

The company’s P/E ratio is expected to be 11.11 for FY24F, improving slightly to 11.04 by FY26F. Its P/BV is forecasted at 0.38 for FY24F and 0.37 for FY26F, with a steady dividend yield of 2.94%. UOL’s diversified revenue streams and undervaluation make it a compelling choice for long-term investors.

Sector Valuation and Risks

The Singapore property sector is trading at a 58% discount to RNAV and 0.52x FY24F P/BV, reflecting its undervaluation. While there is value to be unlocked, a tempered outlook on rate cuts and economic uncertainty could limit near-term share price outperformance.

Upside risks include strong sell-through rates for new launches and modest price appreciation in the housing market. Conversely, downside risks stem from slower-than-expected interest rate cuts and a sluggish economic outlook, which could dampen housing demand.

Summary Valuation Metrics

The above metrics highlight the investment potential of these companies, with significant discounts to RNAV and attractive valuation ratios.