12-08-2011, 06:36 PM
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Quote:
Originally Posted by Unregistered
Crystal ball gazers are usually wrong. I would go contrarian against their views, just as I did against those run-of-the-mill stock analysts and benefited lots.
Long property!
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Was it because you read the pessimistic report below by Citigroup in 2009?
Citi predicted in 2009 that "residential property prices in Singapore could fall another 35% bringing “prices back to 1998 levels”".
Quote:
More pain to come for Singapore’s property market
Written by The Edge
Tuesday, 13 January 2009 14:08
IF YOU thought the local property market was fairly close to bottom and it was time to start looking at bargains, think again. That’s what US banking giant Citigroup says in a new report on Singapore property titled Bear Trap: Sell into Strength. The way Citi’s property analysts Wendy Koh and Tan Chun Keong see it, there is likely to be a lot more pain in Singapore property in year ahead before we will even see the glimmer of any gain.
Citi bases its pessimistic Singapore property outlook on deteriorating economic fundamentals. The US bank now expects Singapore economy to contract 2.8% this year following a mere 1.5% GDP growth last year and 7.7% growth in 2007. Citigroup strategists are forecasting the benchmark STI will fall to 1,500 again over the next few months before rebounding later in the year to current levels.
As the economy continues to contract, job losses mount and bank lending slows, Citi forecasts mid–tier to high-end residential property prices in Singapore could fall another 35% bringing “prices back to 1998 levels” or down nearly 45% from their peaks.
For the mid-tier segment, where prices have already fallen some 20% from their peaks a year ago, Citigroup forecasts prices are likely to fall further in the absence of an overall housing oversupply. “For luxury properties such as Ardmore Park that have (already) seen price correction of approximately 35% from a year ago, we think prices could potentially fall by another 30-40% to reach the 2003 and 1998 levels,” the Citi report said. This implies a 55–60% decline from their peaks in 2007.
Over-priced mid-tier and high-end property won’t be the only segment impacted. Commercial property is likely to be as severely impacted as the residential. Average office rentals in Singapore fell over 18% quarter-on-quarter in October-December 2008 — the steepest quarterly decline since 2001.
Citi forecast average office rental rates to hit $6 psf later this year. “The rapid downsizing across industries and emergence of shadow space, coupled with limited access to capital, is expected to drive both rentals and capital value down by 60% and 50% from current levels to $6 psf and $1,200 psf respectively,” Citi report said.
Citi is advising clients to take the opportunity in the current stock market rally to sell property stocks that have recovered 30% from their 2008 lows even as economic fundamentals have continued to deteriorate. “We believe the current (market) rally is not sustainable and recommend investors sell into it, with the exception of Allgreen.”
Citigroup last week downgraded major property stocks like CityDev, Keppel Land and Wing Tai to “sell”, while retaining its previous “sell” rating on the property giant CapitaLand.
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