Strong Home Sales Lift Demand For Property Issues

Source : The Straits Times, June 17, 2008

PROPERTY counters rebounded yesterday following the positive news about private home sales - and took warrants on the shares along in their wake.

Sales hit 441 units last month, up 55 per cent from the 284 in April, as buyers took advantage of easing prices.

Last Friday, CapitaLand was down about 8 per cent for the week compared to a fall of about 5.3 per cent for the Straits Times Index. City Developments (CDL) was down about 6.7 per cent for the week.

But yesterday, the positive news on home sales sent property counters bouncing back.

CapitaLand rose 10 cents to $5.90 on a volume of 7.2 million shares while CDL was up 10 cents at $10.52 on a volume of 2.25 million shares. Keppel Land was up four cents at $5.16 with 1.35 million shares changing hands.

'The sales momentum in May has continued in June such that the number of new homes sold is likely to be better,' said Mr Joseph Tan, an executive director of residential property at CB Richard Ellis.

The activity among the mother shares was reflected in the warrants market.

A warrant issued on CapitaLand by Macquarie Securities rose one cent to 18 cents on a volume of 9.6 million units. Its exercise price is $5.84.

Another warrant with an exercise price of $6.83 and a conversion ratio of 1000 shares to 2,970 warrants rose half a cent to 6.5 cents with 1.2 million units traded.

But a call warrant on CDL with an exercise price of $12 fell half a cent to 11 cents with 1.2 million units traded.

The Urban Redevelopment Authority said in April that Singapore home prices climbed 3.7 per cent in the first quarter, the smallest increase in more than a year.

Jones Lang LaSalle said yesterday that developers are likely to keep prices competitive, by offering discounts, to keep the market demand stable.

Its head of research, Dr Chua Yang Liang, said: 'The market will continue to see the return of these price-sensitive buyers as long as prices remain affordable.'