• In the 2018 YTD, the five best-performing constituents of SGX’s Real Estate Index were Yanlord Land (+11.1%), United Engineers (+8.4%), Ho Bee Land (+6.0%), Hongkong Land (+4.9%), and Ocean Sky (+4.3%).
  • The SGX Real Estate Developers & Operators Index comprises 25 constituents with a combined market cap of over S$70 billion. The component stocks with the five biggest weights are Hongkong Land (10.6%), UOL Group (9.8%), CapitaLand (9.8%), City Developments (9.2%) and Yanlord Land (9.0%).
  • This year, Singapore’s property market is expected to extend its recovery. In 1Q18, private residential property prices jumped 3.9% QoQ, surging the most since 2010, and building on the previous quarter’s 0.8% rise, URA data showed. Analysts are forecasting a 5%-10% recovery in domestic home prices in 2018.

The SGX Real Estate Developers & Operators Index is a free-float, market capitalisation-weighted index that measures the performance of listed real estate developers and operators in Singapore. The Index comprises 25 constituents with a combined market capitalisation of S$74.1 billion. The component stocks with the five biggest weights – Hongkong Land Holdings (10.6%), UOL Group (9.8%), CapitaLand Ltd (9.8%), City Developments (9.2%) and Yanlord Land Group (9.0%) – account for almost half the Index’s weighting.

In the 2018 year thus far, the 10 best-performing constituents in the Index have averaged a total return of 3.9%. The five best performers are: Yanlord Land Group (+11.1%), United Engineers (+8.4%), Ho Bee Land (+6.0%), Hongkong Land (+4.9%), and Ocean Sky International (+4.3%). These five constituents have averaged a year-to-date total return of 7.0%, bringing their average one-year and three-year total returns to 5.6% and 4.3% respectively.

NameSGX CodeIndex Weight %Market Cap S$M23 May Closing PriceTotal Returns YTD %Total Returns 1Y %Total Returns 3Y %P/B (x)Dvd Ind Yld %
Yanlord Land GroupZ259.03,3421.73011.1-
United EngineersU046.91,7982.8208.47.616.70.91.4
Ho Bee LandH133.51,6712.5106.09.622.87.03.2
Hongkong Land Hldgs*H7810.722,7547.2204.90.4-
Ocean Sky International1B60.1320.0974.315.5-57.8N/AN/A
Chip Eng Seng CorpC293.25870.9451.139.835.70.74.2
Far East OrchardO102.16121.4400.01.0-
Heeton Hldgs5DP0.41820.5600.025.5-

*SGD equivalents shown for Hongkong Land Hldgs traded in USD.

Source: Bloomberg & SGX StockFacts (Data as of 24 May 2018)

Domestic Sector Outlook

This year, Singapore’s property market is expected to extend its recovery from a four-year slump. After hitting a record high in the third quarter of 2013, domestic home prices have slumped for 15 consecutive quarters through to the second quarter of 2017, largely due to a slew of government cooling measures.

Home prices have rebounded over the last three quarters, prompting aggressive land bids from developers, even as most of the government’s property curbs remain in place.

In the January to March quarter, private residential property prices jumped 3.9% from the previous quarter, surging the most since 2010 and building on the previous quarter’s 0.8% increase, data from the Urban Redevelopment Authority (URA) showed. Click here for the full release.

The momentum continued in April, with developers selling 729 units, more than the 716 units sold in March, and the highest since November.

Analysts from Goldman Sachs, Morgan Stanley, Credit Suisse, OCBC and DBS have forecast a 5% to 10% recovery in domestic home prices this year. Real estate redevelopment deals – or en bloc sales – are set to surge this year to S$12.8 billion, the highest in more than a decade, according to data from Cushman & Wakefield Singapore.

Other segments of the property market are also improving. Colliers International has predicted that Grade A office rents in the city-state could pick up by 5% to 7% this year, following higher demand for office space from new tenant segments like co-working operators, as well as technology and media companies.

A stronger manufacturing sector, coupled with government initiatives to transform industry and encourage adoption of new technologies, will also drive the growth of the business and industrial park segments, it noted.

Recent Earnings Highlights of Index Constituents

Biggest Index Weight – Hongkong Land Holdings

The secondary-listed developer owns and manages more than 850,000 sq m of prime office and luxury retail property in key Asian cities, principally in Hong Kong, Singapore and Beijing.

In Singapore, the Group has a portfolio of prime residential property assets through its subsidiary, MCL Land. Its Singapore portfolio comprises two completed projects Lakeville and Lake Grande, while three others – Sol Acres, Margaret Ville and Eunosville – are slated for completion between 2018 and 2021. The Group also has investment properties in the city-state, held mostly through joint ventures.

On 9 March 2018, Hongkong Land reported a 14% YoY jump in underlying profit to a record US$970 million for the full year ended 31 December 2017, with revenue declining 2% to US$2.0 billion.

For the full financial results, click here.

Best Performer in YTD – Yanlord Land Group

Yanlord is a real estate developer focused on developing high-end residential, commercial and integrated property projects in strategically selected key high-growth cities in the People’s Republic of China.

Last month, the Group made its maiden entry into the Singapore residential market via a joint venture with Hongkong Land subsidiary MCL Land, clinching freehold condominium site Tulip Garden for over S$900 million in the city-state’s second-largest collective sale this year.

On 14 May 2018, Yanlord reported a 22.4% YoY gain in profit for the period to RMB1.80 billion for the first quarter ended 31 March 2018, while revenue rose 13.7% to RMB7.19 billion on the back of higher average selling prices.

Demand for prime residential developments in China remains healthy, driven by continued upgrader demand and population inflow into first and core second-tier cities, Chairman and CEO Zhong Sheng Jian said in its results statement. While near-term volatility may arise following the government’s austerity measures, the Group’s quality developments continue to attract attention of home buyers in China, he added.

For the full financial results, click here.

Second-Best Performer in YTD – United Engineers

Founded in 1912, UEL is one of Singapore’s pioneer companies that played an integral role in the country’s physical and economic transformation. The Group has developed numerous iconic buildings that define the Singapore landscape, including orchardgateway, UE BizHub CITY (formerly UE Square), UE BizHub EAST, as well as the mixed-use development at one-north, comprising The Rochester, Rochester Mall and Park Avenue Rochester.

On 7 May 2018, UEL reported a 3% YoY rise in attributable net profit to S$9.0 million for the first quarter ended 31 March 2018, as revenue fell 1% to S$105.2 million.

Looking ahead, UEL noted that the improved outlook from a stronger global economy will continue to bode well for Singapore’s property market. It intends to embark on asset enhancement initiatives for its investment properties in the city-state and may make selective acquisitions if and when such opportunities arise.

In China, while the government’s property cooling measures have brought about a relative slowdown in activity in some cities, demand for good quality housing remains firm, and the market may see sustainable growth over the longer term, it added.

For the full financial results, click here.

This article was originally published on SGX.

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