Credit Suisse says recent signed rents and transacted cap rates in Singapore have exceeded expectations, “signalling bullish prospects for rent increases.”
It notes that shadow space seems to be well absorbed for quality buildings, and pre-commitment levels have risen from 32% (September 10) to 52% today. “We believe that the positive news flow momentum will continue into 2011, favouring rising rents.”
It notes that shadow space seems to be well absorbed for quality buildings, and pre-commitment levels have risen from 32% (September 10) to 52% today. “We believe that the positive news flow momentum will continue into 2011, favouring rising rents.”
Raises rental forecasts for 2011-12 by 3% to 8%, broadly in line with property consultants’ expectations, but ahead of consultants’ $13.50 psf Grade-A forecast for 2013.
Notes demand-supply outlook is supportive of rising rents; “Singapore remains attractive for business set-ups and expansions, as office rents are still at a 50% discount to Hong Kong’s, and the gap is expected to widen further.”
Prefers CapitaCommercial Trust (C61U.SG), raising its target to $1.81 from $1.63, and K-REIT (K71U.SG), also raising its target to $1.75 from $1.51. Rates both at Outperform, as proxies to the office up-cycle. The house is Neutral on Suntec REIT (T82U.SG); raises its target to $1.64 from $1.60 and says the stock is fairly priced.
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