While other research houses see risks in Singapore’s residential real estate market, Credit Suisse analysts are optimistic on the sector.
Credit Suisse said in a recent report that it expects to see 15 percent year-on-year increase in Singapore’s residential property market this year and another 5 percent increase in 2011 and 2012 each.
“The low interest rate environment, historical high rate of GDP growth as well as continued population growth should propel growth in the Singapore residential property market,” it said.
While it acknowledges the presence of potential risks including capital inflow controls or more government anti-speculation measures, Credit Suisse pointed out that the average valuation of Singapore real estate stocks stay below the historical average, and the residential sector is “reaching the peak with decelerating growth momentum”.
“While the market could be concerned that 37 percent of its RNAV (revised net asset value) is in residential, the landbank had been mostly acquired at low costs, and we estimate 56 percent is in the luxury sector, which has lagged the mass market segments,” said Credit Suisse.
Credit Suisse’s outlook on the Singapore home market differs from those of other research houses, which are expecting additional state intervention to weigh down on the sector.
Analysts at Nomura said that “policy overhang should translate into a flattish outlook for home prices in 2011.”
“Underlying housing demand and overall liquidity conditions are still keeping the property market relatively buoyant, despite the government’s efforts hitherto to cool the market,” they said.
CIMB Group also had unfavourable views on the residential sector, saying that a tighter immigration policy could affect the market.