CityDev Declines 5.2% After UBS Downgrades Stock To 'Neutral'

Source : The Business Times, April 15, 2008

UBS analyst Regina Lim cites falling home prices in city-state

City Developments Ltd, Singapore's second-largest real estate company, led declines in developers after UBS AG downgraded the stock to 'neutral', citing falling home prices in the city-state.

CityDev, controlled by billionaire Kwek Leng Beng, fell 62 Singapore cents, or 5.2 per cent, to S$11.30 at the 5:05pm close in Singapore, a two-week low.

UBS analyst Regina Lim cut City Developments from 'buy' and reduced her price estimate to S$12.30 from S$14.12.

'UBS economists expect 2008 and 2009 growth to be 3.5 per cent and 5.9 per cent, respectively,' Ms Lim said in a report yesterday. 'We downgrade our residential price forecasts for 2008 and 2009 by up to 20 per cent. We remain cautious on developers with substantial exposure to Singapore.'

Singapore private home prices gained 4.2 per cent in the first three months of this year, the slowest pace in more than a year, after gaining 31 per cent in 2007, according to data from the Urban Redevelopment Authority released on April 2.

New home sales fell to 170 units in February, the lowest in at least nine months, the authority's data showed last month.

The FTSE Straits Times Real Estate Index, consisting of 43 companies on the Singapore stock exchange, has declined 13 per cent this year and the benchmark Straits Times Index has fallen 12 per cent.

Prime property prices could fall by 20 per cent this year and 2009, Ms Lim said in the report, with so-called middle-segment homes declining 10 per cent, and mass-market dwellings unchanged.

SC Global Developments Ltd, a builder of luxury homes in the city-state, fell five cents, or 3.6 per cent, to S$1.35, the most since April 9, when it plunged 4.9 per cent.

Keppel Land Ltd, the third-largest developer, fell 26 cents, or 4.4 per cent, the most since March 17, to S$5.66. UBS said both were vulnerable to slowing home sales in Singapore.

Ms Lim said UBS estimates for Singapore's economic growth indicate home prices may decline this year before recovering in 2009.

'In previous corrections, home prices recovered one to three quarters after GDP picks up,' she noted. -- Bloomberg