Singaporean’s love affair with property is well-documented.
It’s not unusual to hear of crowds thronging the showrooms for newly-launched private and executive condominiums (ECs).
Back in October last year, an EC launched in Tengah Town by City Developments Limited (SGX: C09) and MCL Land saw 73% of the project sold on its launch day.
And Tenet, an EC in Tampines, sold 93.2% of the property just last week after balloting from second-time buyers.
Singapore private home prices also shot up 8.4% year on year in 2022, though growth was slower than the preceding year.
Physical property, however, represents a huge financial commitment for the buyer as mortgage loans need to be taken up.
In a rising interest rate environment, taking on debt has the potential to increase financial stress.
What’s more, it’s tough to effectively diversify when you purchase physical property due to the large upfront financial outlay.
There’s an easier way to gain both exposure and diversification to physical property – through the ownership of property development stocks.
Here are three that may be suitable for your buy watchlist.
Frasers Property Limited (SGX: TQ5)
Frasers Property Limited, or FPL, is a developer, investor, and manager of real estate products and services with assets under management (AUM) of approximately S$43.6 billion as of 30 September 2022.
FPL operates across five property sub-classes and has a hospitality business with hotels and serviced apartments located in 20 countries and more than 70 cities.
For its fiscal 2022 (FY2022) ending 30 September 2022, FPL saw revenue inch up 3% year on year to S$3.9 billion.
Net profit excluding one-off items surged by nearly 60% year on year to S$928.3 million.
A first and final dividend of S$0.03 was declared, 50% higher than a year ago.
The group completed 454,000 square metres of development projects in FY2022 and has 820,000 square metres of industrial and logistics, commercial and retail development pipelines to be completed in the next two years.
FPL’s residential segment sold 9,839 units in FY2022 and has a pipeline of more than 15,000 units as of 30 September 2022.
The group sees resilient demand for quality residential developments in Singapore.
It is also on track to deliver 14 industrial and logistics developments in FY2023 while completing seven development projects in FY2022.
CapitaLand Investment Limited (SGX: 9CI)
CapitaLand Investment Limited, or CLI, is a blue-chip property investment group with a total AUM of S$130 billion and funds under management (FUM) of S$86 billion as of 30 September 2022.
For its fiscal 2022’s third quarter (3Q2022) business update, CLI saw its fund management fee-related earnings (FM FRE) climb 16% year on year to S$339 million for the first nine months of 2022 (9M2022).
The property giant’s private fund-raising is also gaining momentum, with S$752 million of external capital raised in 9M2022.
As a result, FRE for this segment jumped 44% year on year to S$118 million.
CLI’s lodging business has also enjoyed a strong recovery in line with border reopenings and the resumption of air travel.
9M2022’s revenue per available unit (RevPAU) surged 41% year on year to S$90, with all regions except China registering an increase.
CLI is also actively recycling capital, with around 86% of divestments retained as FUM that can generate recurring FRE.
City Developments Limited (SGX: C09)
City Developments Limited, or CDL, is a global real estate company with a property network spanning 104 locations in 29 countries and regions.
The group has seen good progress in its Singapore property developments as disclosed in its latest 3Q2022 update.
For 9M2022, CDL and its joint venture associates sold 802 units worth S$1.9 billion, but with the launch of Copen Grand, sales surged to 1,417 units worth S$2.8 billion by 30 November.
Meanwhile, the group also has a well-located EC with 510 units in the Bukit Batok area and is confident that this can sell well, too.
CDL has also replenished its development pipeline by securing 178,936 square feet of EC government land sales in September.
Elsewhere, the group’s Singapore office portfolio also enjoyed a high committed occupancy of 94.3% while its retail portfolio reported a 95.3% committed occupancy.
Meanwhile, CDL is also sourcing for suitable new development sites in China and recently acquired five purpose-built student accommodation assets in the UK for £215 million.
The above shows that the group is actively looking to grow its business in different regions and property sub-classes.
CDL also recently quadrupled its interim dividend as it reported a significantly higher net profit for 1H2022.
In our latest Special FREE Report, we cover the best performing stocks and blue chips in the Singapore market in 2022. Look forward to 2023 as we cover the industries and sectors that are poised to do well in the year ahead. Click HERE to download for free now.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
