Company Name: KEPPEL LAND LIMITED
| Research House: Citigroup | Price Call: SELL | Target Price: 3.38 |
The premium Keppel Land paid for a Tanah Merah-area residential site suggest developers continue to adopt a forward-pricing mentality, Citigroup says, citing the high breakeven cost.
The bid price of $791psf was a record for residential land in the outside Central Region area, and at 17%-48% premiums to two other land tenders in the vicinity this year, it notes.
Citigroup estimates breakeven at $1,200psf, slightly under the estimated around $1,300psf average selling price for the nearby eCO project. It expects a $1,400psf ASP for the Keppel Land site.
This should continue to drive sales for the eCO and nearby Urban Vista project on the expectation prices would creep higher, it says; "while this would serve to keep the physical market relatively stable, it raises the spectre of further regulatory intervention to avert any signs of an asset bubble." Citigroup keeps a Sell call with $3.38 target. The stock is up 0.6% at $3.49.
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