The last wave, goodbye
The property downcycle has started earlier than we expected due to
weak sentiment, impending excess supply and property disposals by
speculators at low prices. We expect weak players to succumb to
significant price cuts this year. CDL is our top sector Sell.
Chart 1 : Private residential price index vs occupancy rate
60
80
100
120
140
160
180
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008F2009F2010F
Occupancy rate
89%
90%
91%
92%
93%
94%
Index 95%
Private residential price index Private residential occupancy rate
Source: CEIC data, ABN AMRO estimates
Earlier-than-expected downturn
We believe the Singapore property market has entered a downcycle a year earlier
than our previous expectation, due to the global economic downturn. While the
residential price index rose 4.2% in 1Q08, a closer look reveals that uncompleted
prime property prices declined 10-20%. We forecast a net supply of 10,000 units in
2009 and 15,000 units in 2010, vs average new demand of 7,500 units in the past 10
years. This suggests a protracted downturn in 2009-2010 even if the US sub-prime
fear subsides.
More price cuts in the horizon
We anticipate more price cuts this year as small developers have created
considerable inventory in the past three years. En bloc purchases by these developers
represented 38% of total purchases in 2006 and 33% in 2007. According to
Bloomberg, gearing levels of small players were high at 1.83x as of end-2007, vs
0.4x for large players. We estimate prices of prime properties could decline 30%,
assuming thin margins for small developers. Speculators who bought on deferred
schemes may be hard pressed to dispose of units at low prices as they near
completion. We estimate 724 of such units will be sold in 2008 and 2,033 in 2009 vs
developers' sales of 8,300 units pa. In 1Q08, only 795 units was sold by developers.
Middle and low-end segments may not be spared
In 1Q08, prices of uncompleted units held up in the middle (-1% from 3Q07) and
low-end (+10%) segments, but volumes fell 70-80%. Note that property major Far
East Organisation cut prices for three of its projects by 3-5% in 1Q08. More price cuts
look likely, although they may be milder for the middle and low-end segments than
for prime, on relatively few speculative purchases and better affordability.
Underweight the sector
We downgrade CapitaLand, City Development (CDL) and Keppel Land to Sell. CDL is
our top Sell as it has the highest exposure to the Singapore market. We maintain
Buys at reduced target prices for UOL and Bukit Sembawang, mainly on valuations.
Produced by: ABN AMRO
Asia Securities
(Singapore) Pte Ltd
Underweight
Sector relative to market
www.abnamroresearch.com
Analyst
Fera Wirawan
Singapore
+65 6518 7238
fera.wirawan@sg.abnamro.com
Permit No. MICA (P) 210/06/2007, Level 21, One Raffles Quay, South Tower, 048583,
Singapore
Important disclosures can be found in the Disclosures Appendix.

Contents
R E A L E S T A T E 2 4 A P R I L 2 0 0 8 2
I N V E S T M E N T V I E W
The last wave, goodbye 3
We believe the property sector is heading towards an early cyclical downturn on
adverse external conditions. Smaller developers should be the first to cut prices,
especially given the upcoming excess supply from 2009F.
Downcycle starts a year early 3
F O R E C A S T S & A S S U M P T I O N S
Key assumptions 5
We reduce our ASP assumptions for the upcoming residential launches across all
segments in view of the pressure on small developers and potential disposal from
speculators.
ASP forecasts cut, capitalisation rates raised 5
I N D U S T R Y D Y N A M I C S
More price cuts 6
We project price cuts of up to 30% in the prime segment, as small developers
with a 41% share of en bloc inventory may reduce gearing levels. Potential
disposal by speculators should add to the pricing pressure.
More pricing pressure from small developers 6
So, are they in trouble? 7
Deeper cuts on the horizon for prime properties 8
Middle and low-end segment may not be spared 11
A P P E N D I X
Appendix 14
C O M P A N Y P R O F I L E S
Company profiles 19
Bukit Sembawang Estates 20
CapitaLand 25
City Developments 30
Keppel Land 35
UOL Group 40