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SINGAPORE (July 7): Maybank Kim Eng is maintaining its “positive” rating on Singapore’s property sector after collecting feedback from investors in Hong Kong.
In a Thursday report, analyst Derrick Heng says Hong Kong investors were expecting incremental policy measures to further drive a re-rating in the sector despite the strong YTD share price rally.
The analyst says the investors generally prefer residential developers as an impending rebound in home prices will provide a sector catalyst. This is followed by commercial and industrial REITs.
Investors from the city-state also agree that ample liquidity and healthy affordable ratios will mitigate the downside risks to home prices, despite the weak rental market.
They also expect downside to be limited as supply outlooks improve and office rents declines.
“We note that there is consensus that high replacement cost of office buildings — due to elevated land prices — and keen interest in office assets will continue to support valuations of office REITs,” says Heng.
Hong Kong investors are also positive towards the business park sub segment and its large-cap proxies such as Ascendas REIT and Mapletree Industrial Trust given waning surplus supply means an improvement in sector fundamentals. — theedgemarkets.com.sg
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