03 February 2016

Asia Pacific/Singapore
Equity Research
Real Estate (Property SG (Asia))

Singapore Property Sector

Research Analysts
Louis Chua
65 6212 5721
louis.chua@credit-suisse.com
Nicholas Teh
65 6212 3026
nicholas.teh@credit-suisse.com
Daniel Lim
65 6212 3011
daniel.lim@credit-suisse.com

COMMENT

QC & ABSD chargeswho is impacted?

Figure 1: Top 10 projects which face the largest QC/ABSD charges in 2016^
Project

Developer

Nouvel 18
CDL & Wing Tai
TwentyOne Angullia Park
China Sonangol
Le Nouvel Ardmore
Wing Tai
Ardmore Three
Wheelock Properties
d'Leedon
CAPL/Hotel Properties
The Interlace
CAPL/Hotel Properties
iLiv @ Grange
Heeton Holdings
Michaels' Residences
SCB Terraform
Goodwood Residence
Guocoland
Robin Residences
Sing Holdings
Total ABSD charges for our full list of properties
Total QC charges for our full list of properties

Total Deadline to Units

units
sell
unsold
156
Nov-16
156
54
Apr-16
45
43
Apr-16
39
84
Dec-16
80
1,715
Oct-16
190
1,040
Sep-15
140
30
Oct-15
30
40
Dec-16
29
210
Jun-15
41
134
Dec-16
61

%
Est 2016
Unsold
fees
100%
38.2
83%
15.2
91%
14.6
95%
13.7
11%
11.9
13%
11.8
100%
11.7
73%
9.1
20%
8.7
46%
6.6
137.5
88.2

^excludes Echelon and Seventy Saint Patrick's (both have 3 units remaining as at Dec-15).
Source: Company data, URA, Credit Suisse estimates

Expect price pressures to compound in 2016. We expect the pace of

private residential price declines to accelerate, with price declines of 5-10%
in 2016E, given: (1) peak supply of 21,906 private residential units in 2016E,
(2) offloading of investment properties amidst weak market fundamentals
with the expiration of Seller's Stamp Duty (SSD) and importantly, impending
financial charges on developers from Qualifying Certificate (QC) charges
and Additional Buyer's Stamp Duty (ABSD).
Potentially S$1.5 bn of QC & ABSD charges on developers in 2016-17.
Based on our estimates, S$1.5 bn of QC & ABSD charges could be imposed
on developers, should they be unable to sell the units by their project
deadlines. We expect developers to increasingly adopt price cutting
strategies in 2016 in order to avoid punitive financial charges. The risks to
CAPL and CDL are limited, however, with potential QC/ABSD charges in
2016 representing only 0.1% of CAPL's book value and 1% of CDL's book
value. We also note that CAPL's Sky Vue had a successful relaunch in Nov15, moving 79 out of 182 unsold units following price discounts.
Weak macro supportive of policy easing. CS economists expect SIBOR
to rise to 2% by end-2016, with local employment growth at only 1% from
2016 to 2020. Interestingly, there has also been a recent call by an MP to
remove ABSD for locals. Amidst oversupply and a weak macroeconomic
environment, we continue to believe that a pre-emptive re-calibration of
measures will better achieve a stable and sustainable property market.
CDL our preferred pick. We have recently added CDL to our AxJ Focus
List, and believe multiple catalysts lie ahead for CDL. Near term, we believe
there could be upside surprise to dividends in its FY15 results on 25-Feb.
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do

business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS

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03 February 2016

Focus charts and tables

Figure 2: We expect price declines of 5-10% in 2016E, with
a relative preference for the high-end segment (CCR)
Index

Figure 3: A summary of key property measures

Measure

180

Rates

Com m ents

Seller's
Stamp Duty
(SSD)

If property is sold in: 1st year - 16% Rates applicable from Jan-11. To cool the property
2nd year - 12%
market and provide a strong disincentive for
3rd year - 8%
investors looking to make short term gains
4th year - 4%
Total Debt
Max 60% of gross monthly income
TDSR applies from Jun-13. Refinancing of
Servicing
used to service loans & mortgages
investment property loans above 60% only
Ratio (TDSR)
allow ed up to 30-Jun-17, s.t. other conditions

160
140
120
100
80

URA Residential Price Index

CCR

OCR

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

60

Additional
Buyer's
Stamp Duty
(ABSD)

Foreigners and non-individuals: 10%

Developers w ho acquire land or residential
(Dec-11 to Jan-13) property w ill be s.t. ABSD. Remission is granted if
15% (Jan-13 onw ards) project is completed and fully sold w ithin 5 years.
Otherw ise, ABSD w ith 5% p.a. interest is payable

Qualifying
Certificate
(QC)

Extension charge: 8%/16%/24% of Any foreign developer must apply for a QC w hen
land cost, pro-rated on % of unsold
acquiring private land for development.
units, for 1st/2nd/3rd and Developers must complete and receive TOP w ithin
subsequent year 5 years and sell all units w ithin 2 years from TOP

RCR

Source: URA, Credit Suisse estimates

Source: URA, IRAS, MAS, Credit Suisse research

Figure 4: Rental carry less attractive, with rising rates and

declining rents

Figure 5: Top 10 projects with highest QC/ABSD charges

due in 2016^

Rental Yield (%)

5.0
4.5
4.0
3.5
3.0

D e a dline
t o s e ll

Unit s
uns o ld

% Uns o ld

2 0 16 f e e s

CDL & Wing Tai

156

16-No v

156

100%

38.2

China So nango l

54

16-A pr

45

83%

15.2

Wing Tai

43

16-A pr

39

91%

14.6

84

16-Dec

80

95%

13.7

D e v e lo pe r

No uvel 18
TwentyOne
A ngullia P ark
Le No uvel
A rdmo re

3.74
3.38

T o tal
unit s

P ro je c t

A rdmo re Three Wheelo ck P ro perties

2.5

d'Leedo n

CA P L/Ho tel P ro perties

1,715

16-Oct

190

11%

11.9

The Interlace

CA P L/Ho tel P ro perties

1,040

15-Sep

140

13%

11.8

1.25

iLiv @ Grange

Heeto n Ho ldings

30

15-Oct

30

100%

11.7

M ichaels'
Residences
Go o dwo o d
Residence
Ro bin
Residences

SCB Terrafo rm

40

16-Dec

29

73%

9.1

1Q16

2.27

2.0

Guo co land

210

15-Jun

41

20%

8.7

Sing Ho ldings

134

16-Dec

61

46%

1.5
1.0
0.5
0.0
3Q16

3Q15

1Q15

3Q14

1Q14

3MSIBOR

3Q13

1Q13

3Q12

1Q12

3Q11

Islandwide

1Q11

3Q10

1Q10

3Q09

1Q09

3Q08

Prime

1Q08

3Q07

1Q07

3Q06

1Q06

3Q05

1Q05

3Q04

1Q04

3Q03

1Q03

Luxury

CS 3M SIBOR Estimate

Source: CBRE, URA, the BLOOMBERG PROFESSIONAL service,

Credit Suisse estimates

Figure 6: [Top 10 projects with largest price declines from

6.6

T o t a l A B S D c ha rge s f o r o ur f ull lis t o f pro pe rt ie s

13 7 .5

T o t a l Q C c ha rge s f o r o ur f ull lis t o f pro pe rt ie s

8 8 .2

^excludes: Echelon (3 units unsold as at Dec-15), and Seventy Saint

Patrick's (3 units unsold as at Dec-15). Source: Company data, URA,
Credit Suisse estimates

Figure 7: CDL discount to RNAV

launch]^
As at Dec 2015
Units
% Unsold
unsold

(%)
80

Deadline to
sell

Area

Units sold

Far East

54

Sep-17

CCR

31

23

43%

2,270

1,737

-23%

60

CapitaLand

64

Mar-15

CCR

62

3%

2,755

2,248

-18%

40

Hijauan

Selangor Dredging Bhd

41

Feb-17

CCR

38

7%

2,342

1,921

-18%

20

One Surin

ACT Holdings

27

Sep-17

OCR

21

78%

768

678

-12%

Mon Jervois

SingLand

109

Feb-17

CCR

46

63

58%

2,053

1,838

-11%

The Trilinq

IOI

755

Jan-17

OCR

220

535

71%

1,508

1,356

-10%

-20

The Creek @ Bukit

Chiu Teng Group

260

Sep-17

RCR

116

144

55%

1,628

1,487

-9%

-40

The Skywoods

Hock Lian Seng & Meadows Bright

420

Sep-17

OCR

368

52

12%

1,280

1,178

-8%

-60

Palms @ Sixth Avenue

MCL Land

32

Feb-17

CCR

27

16%

1,159

1,067

-8%

Robin Suites

Goldhill Cap & Robin 25

92

Feb-17

CCR

65

27

29%

2,520

2,340

-7%

Developer

The Siena
Urban Resort Condominium

First 3
months

ASP (S$ psf)

Last 3
% drop
months

Total units

Project

17.7

-7.2
-32.2
-45.5
-52.8

-80
Dec-90

Dec-94

Dec-98

Dec-02

CIT Prem/(disc) to RNAV

^Average selling price (ASP) calculated based on caveats from URA

Dec-06

Dec-10

Mean - (7.2)%

Dec-14
1 std

Source: Thomson Reuters, Credit Suisse estimates

Realis. Data includes primary and secondary data.

Figure 8: FY15E yields at 4.6%, assuming an additional DPS of 16.5cts

(S cts/share)

2005

2006

2007

2008

2009

2010

2011

2012

2013

DPS

12.5

25

30

7.5

18

18

13

16

16

22

38

80

59

65

71

56

60

55

50

56

56%

65%

38%

13%

12%

25%

32%

22%

29%

32%

29%

Core EPS
Payout

2014 2015E
16

Source: Company data, Credit Suisse estimates

Singapore Property Sector

03 February 2016

Expect price pressures to compound in 2016

Private residential prices have most recently seen a ninth consecutive quarter of decline in
4Q15, with overall prices down 8.4% from their peak in 3Q13. We expect the pace of
decline to accelerate however, with overall price declines of 5-10% in 2016E, given: peak
supply of 21,906 private residential units in 2016E, offloading of investment properties
amidst weak market fundamentals with the expiration of Seller's Stamp Duty (SSD) and
importantly, impending financial charges on developers from Qualifying Certificate (QC)
and Additional Buyer's Stamp Duty (ABSD).
Figure 9: Private residential price indexby region

Figure 10: YoY change in private residential prices

Index
180
160

(%)

2010 2011 2012 2013 2014 2015 2016E

Overall

17.6

5.9

2.8

1.1

-4.0

--3.7

-7.5

High-end (CCR)

14.2

4.0

0.8

-1.9

-4.1

-2.5

-5.0

Mid-market (RCR)

17.6

4.5

1.6

-0.1

-5.3

-4.3

-7.5

Mass-market (OCR)

15.0

7.6

6.5

6.5

-2.2

-3.7 -10.0

140
120
100
80

URA Residential Price Index

CCR

OCR

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

60

RCR

Source: URA, Credit Suisse estimates

Source: URA, Credit Suisse estimates

Peak supply of 21,906 private units in 2016E

We expect 2016 to remain a year of peak supply, with an additional 4,561 EC units and c.
25,000 HDB units expected to complete in 2016. With total supply at c. 51,000 units vs. an
estimated demand of c. 17,000 units, the demand-supply imbalance is expected to worsen
in 2016, adding pressure in occupancies and capital values.
Figure 11: Private supply pipeline* averages 15,553 units

Figure 12: Oversupply to persist well into 2019E, given

p.a. over 2016-18E

record net supply vs slowing population growth

Units
30,000

Units

40,000

100

30,000

25,000

98

20,000

14,351

Net demand less Net supply - LHS

*includes units without sale licences. Source: URA (private only)

2019E

2018E

2017E

2016E

2014

2015E

Completions - 10 yr avg

2013

88

2012

Under Construction

-40,000

2011

2020E

90

2010

2019E

2009

2018E

2008

Planned

2017E

-30,000

2007

Completed

2016E

249
>2020E

2006

2,351
1,018

Government
undersupplied
the market

2005

2,573

92

-20,000

2004

3,369

94

-10,000

2003

7,309

8,700
2015

11,890

2002

9,882

1,702

2001

14,283

5,000

96

10,000

10,402

2000

10,000

68

1999

21,906

1998

18,971

1997

20,000
15,000

Occupancy (%) - RHS

*includes units without sale licences. Source: URA (private only)

Offloading of investment properties with the expiration of SSD

While Seller's Stamp Duty (SSD) was introduced progressively from February 2010, the
substantial stamp duty rates of up to 16% (if the property was disposed within the first year
of purchase) was only introduced in January 2011.

Singapore Property Sector

03 February 2016

Figure 13: Timeline to the introduction of SSD rates

Round

Date

st

1 round

Seller's Stamp Duty rates

Rationale

SSD of 3% (from 0%)

To discourage short-term speculative

activity that could distort prices

19-Feb-10

st

3% if property is sold in 1 year

nd
30-Aug-10
2% for 2 year To temper sentiments among purchasers
rd
1% for 3 year
st
Raised to 16% (from 3%) for 1 year
To cool the property market and provide
nd
12% (from 1%) for 2 year
13-Jan-11
a strong disincentive for investors looking
rd
8% (from 1%) for 3 year
to make short term gains
th
4% (from 0%) for 4 year

nd

2 round

rd

3 round

Source: IRAS, MND

As such, we believe that there could be further selling pressure from residential property
investors from 2016, especially from investors who bought their units closer to the peak in
2013, against the expectations of further price declines, weak economic and employment
outlook impacting holding power and negative rental carry from rising interest rates and
softening rents.
Investors who bought their properties above the 60% TDSR threshold prior to the
introduction of the TDSR framework may be particularly susceptible, as they may face
difficulties refinancing their investment property loans despite rising rates, as we approach
the 30 June 2017 transition period deadline. (The MAS allowed a transition period during
which a borrower may refinance his investment property loans above the 60% threshold,
subject to certain conditions.)
Figure 14: Private residential transactions

Figure 15: Private residential rents vs. vacancies

Units

Index

100.0

90.0

14,117

80.0

5,531

6,677

70.0

7,316

7,440

60.0

2014

2015

22,719

16,736

20,000

7,771
12,847

15,000
22,197
15,904

Source: URA, Credit Suisse estimates

Rental Index (whole island)

Mar-15

Mar-14

2013
Secondary sales

Mar-13

2012
Primary sales

Mar-12

2011

Mar-11

2010

Mar-10

Mar-09

14,948

Mar-08

16,292

5,000

Mar-07

10,000

110.0
15,676

22,608

Mar-06

25,000

%
10

32,640

35,000
30,000

120.0

37,873

Mar-05

38,900

Mar-04

40,000

Vacancy [RHS]

Source: URA

Potentially S$1.5 bn of QC & ABSD charges on

developers in 2016-17
Based on our estimates, QC & ABSD charges worth S$226 mn in 2016 and S$1.3 bn in
2017 could be imposed on developers, should they be unable to sell the remaining unsold
units by their respective project deadlines. As such, while we believe price declines have
thus far been led by the secondary market, we expect developers to increasingly adopt
price cutting strategies in 2016 in order to avoid punitive financial charges, as we
approach the regulatory deadlines. The risks to CAPL and CDL are limited at present,
however, with potential QC/ABSD charges in 2016 representing only 0.1% of CAPL's book
value and 1% of CDL's book value. We also note that CAPL's Sky Vue project had a
successful relaunch in Nov-15, with 79 units sold (43% of the 182 unsold units outstanding
prior to the relaunch) following price discounts of up to 10%.

Singapore Property Sector

03 February 2016

A recap on QC & ABSD charges

The implementation of the Qualifying Certificate (QC) and Additional Buyers Stamp Duty
(ABSD) imply that when foreign developers (where any directors or shareholders are not
Singaporean citizens) acquire land, they are required to complete construction and sell all
the dwelling units by specific deadlines, otherwise they may face hefty charges (see
details in table below).
From 2011 onwards, these new regulations were put in place, and Singapore-listed
developers have been one of the key segments negatively impacted. This has altered their
approach in development, and has forced them to adopt more of a "churn" model (i.e.,
acquire land, and immediately develop and sell), making the more traditional land-banking
model no longer feasible. These measures on developers, coupled with relatively muted
demand from home buyers post the introduction of the total debt servicing ratio (TDSR),
has resulted in some listed developers being privatised (e.g., SC Global in 2013).
Figure 16: Summary of the Qualifying Certificate (QC) and the Additional Buyers Stamp Duty (ABSD)
Qualifying Certificate (QC):
Under the Residential Property Act (RPA), any foreign developer (where its directors and shareholders are not all
Singapore citizens) must apply for a QC when acquiring private land for development.
From January 2011, under the QC rules, foreign developers must: (1) complete construction and receive their
Temporary Occupation Permit (TOP) within 5 years, (2) sell all units in the development within 2 years from receiving
its TOP.
If (1) and/or (2) are not met, the foreign developer is subject to a QC extension fee which will cost 8%/16%/24% of the
land cost, pro-rated on percentage of unsold units, for the 1st/2nd/3rd and subsequent year.
Additional Buyers Stamp Duty (ABSD):
From 8 Dec 2011 to 11 Jan 2013, developers who purchase any residential property or land will be subject to pay a
ABSD charge of 10%, with interest (5% p.a.) on the purchase price if they are unable to complete construction and sell
all dwelling units in the development within 5 years from acquiring the land.
From 12 January 2013, the ABSD charge was increased to 15% from 10%.
Source: Residential Property Act

SingHaiyi's proposed project disposal to avoid QC charges: "not the first time such
an application has been rejected"
Listed developers have in the past avoided QC penalties through bulk sales, such as Hiap
Hoe's sale of all 48 units in Treasure on Balmoral to its parent company, or through
delistings, including Popular Holdings which was delisted in January 2015 and SC Global
which was delisted in Dec 2012.
However, SingHaiyi Group recently announced on 18 Jan 2016 that its application to
dispose of its stake in City Suites (Cosmoloft), a residential development in Balestier, has
been rejected by the Controller of Residential Property. SingHaiyi had earlier intended to
dispose of its stake to ACG Construction, the main contractor of the project, "in view of the
possible levy as a result of the Qualifying Certificate (QC) on unsold units".
We expect the authorities to continue enforcing the strict conditions imposed by the
regulatory framework, thus adding pressure to affected developers to offload their pipeline
of unsold units.
Sizable pipeline of projects subject to QC & ABSD charges
Based on our estimates, we estimate ~S$1.3 bn of QC & ABSD charges could be imposed
on developers, should they be unable to sell the remaining unsold units by their respective
project deadlines. A list of key residential projects which are subject to the financial
charges can be found in figures 20 and 21 below:
Expect developers to increasingly adopt price cutting strategies
While primary sales volumes continue to be lacklustre, resale volumes have seen a
sizable 24% YoY pickup from 4,964 units in 2014 to 6,160 units in 2015, albeit from a low
base. We believe this could be due to buyers continuing to seek better value propositions
in the secondary market, amidst the weak market environment. Anecdotally, we believe

Singapore Property Sector

03 February 2016

that the price declines thus far have been led by the secondary market, as developers
have been reluctant to cut prices for their new launch projects despite tepid sales.
Figure 17: Number of private residential units transacted
(units)

4Q14

3Q15

4Q15

QoQ

YoY

2014

2015

YoY

New sale

1,376

2,410

1,603

-33.5%

16.5%

7,316

7,440

1.7%

Sub-sale

129

130

132

1.5%

2.3%

567

517

-8.8%

Resale

1,255

1,619

1,464

-9.6%

16.7%

4,964

6,160

24.1%

Total sales

2,760

4,159

3,199

-23.1%

15.9%

12,847

14,117

9.9%

Sub-sale as % of total

4.7%

3.1%

4.1%

4.4%

3.7%

45.5%

38.9%

45.8%

38.6%

43.6%

Resale as % of total
Source: URA

Nevertheless, as we continue to approach the regulatory deadlines for the projects

involved, we expect developers to increasingly adopt price cutting strategies in 2016 in
order to avoid punitive financial charges, as we approach the regulatory deadlines.
For example, we note that CAPL's Sky Vue project had a successful relaunch in Nov-15,
with 79 units sold (43% of the 182 unsold units outstanding prior to the relaunch) following
price discounts of up to 10%.
Risks to CDL and CAPL limited at present
In 2016, the impact to CDL is potentially larger relative to CAPL, but is still only 1% of
CDL's book value. We note that Echelon only has three units left unsold (1% of the
project's total units) as at December 2015, which would circumvent CDL paying ABSD of
S$50.5 mn. This would lower the fee impact to 0.4% of CDL's book value, and 5.5% of our
2016 forecast of CDL's core PATMI.
Figure 18: City Development's projects which may be subject to QC or ABSD charges
As at Dec-15
Project
Gramercy Park

CDL
stake
100%

Nouvel 18

50%

New Futura

100%

Bartley Ridge

30%

Area
CCR
CCR

Land cost Deadline

(S$ mn)
to sell
383
2Q 2018
478
Nov-16

Total
units
174

Units
%
unsold Unsold
174
100%

Est QC fee (S$ mn)

Year 1
30.6

Est ABSD
Year 3 & charge
Year 2
beyond (S$ mn)
61.3
91.9
n.a.
76.4
114.6
n.a.

156

156

100%

38.2

124

100%

23.0

46.0

69.0

868

0%

n.a.

n.a.

n.a.

n.a.
49.5

CCR
RCR

287
388

2018
Jan-17

124

Echelon

50%

RCR

396

Dec-16

508

1%

n.a.

n.a.

n.a.

50.5

Jewel @ Buangkok

100%

OCR

301

Jun-17

616

48

8%

n.a.

n.a.

n.a.

38.4

The Venue Residences

60%

RCR

245

Sep-17

266

162

61%

n.a.

n.a.

n.a.

31.3

Note 1: fees/charges are calculated on a 100% basis and assumes no additional units are sold. ABSD calculations also include a 5% interest
rate over 5 years. Source: Company data, Credit Suisse estimates

Singapore Property Sector

03 February 2016

For CapitaLand, both Urban Resort Condominium (2 units left as at Dec 2015) and The
Interlace (140 units left, 13% of total) have started to incur QC extension charges in 2015,
with d'Leedon next in line in 4Q16. Any impact from ABSD might only take place at end2017, as three of its projects are potentially subject to ABSD (Sky Vue and Somerset
Grand Cairnhill in 2017, and Victoria Park Villas in 2018). All in all, however, for 2016, we
note that our estimated QC and ABSD charges represent only 0.1% of CAPL's book value,
and 3.1% of our 2016E Core PATMI, and assumes no additional units are sold for the
impacted projects this year.
Figure 19: CapitaLand's projects which may be subject to QC or ABSD charges
As at Dec-15
Project
d'Leedon

CAPL
stake
35%

Area
CCR

Land cost Deadline

(S$ mn)
to sell
1339
Oct-16

Total
units
1,715

Units
%
unsold Unsold
190
11%

Est QC fee (S$ mn)

Year 1
11.9

Est ABSD
Year 3 & charge
Year 2
beyond (S$ mn)
n.a.
23.7
35.6
n.a.
11.8
17.7

The Interlace

60%

RCR

548

Sep-15

1,040

140

13%

6.9^

Urban Resort Condominium

100%

CCR

161

64

3%

0.5^

0.8

1.2

n.a.

Marine Blue

100%

RCR

101

124

93

75%

6.0

12.1

18.1

n.a.

The Nassim

100%

CCR

60

Mar-15
4Q20182019*
4Q 2017

55

55

100%

4.8

9.6

14.4

n.a.

Sky Vue

75%

RCR

505

Dec-17

694

103

15%

n.a.

n.a.

n.a.

64.5

Cairnhill

100%

CCR

336

4Q 2017

268

100%

n.a.

n.a.

n.a.

42.9

Victoria Park Villas

100%

CCR

366

June-18

109

100%

n.a.

n.a.

n.a.

46.7

Note 1: fees/charges are calculated on a 100% basis and assumes no additional units are sold. ABSD calculations also include a 5% interest
rate over 5 years. *Marine Blue's deadline will depend on when the project receives its temporary occupation permit (TOP). ^Charges were
incurred in 2015. Source: Company data, Credit Suisse estimates

Singapore Property Sector

Singapore Property Sector

Figure 20: List of projects potentially impacted by the Qualifying Certificate (QC) extension fees (sorted by largest fees)
Land cost Deadline to
(S$ mn)
sell#

Project

Developer

Area

OUE Twin Peaks

OUE Ltd

CCR

625

Nouvel 18

CDL & Wing Tai

CCR

478

Leedon Residence
TwentyOne Angullia
Park
Le Nouvel Ardmore

Guocoland

CCR

China Sonangol

Ardmore Three

As at Dec 2015

Est QC fee (S$ mn)~

ASP (S$ psf)^

Units
unsold
392

%
Unsold
85%

Year 1

Year 2

Feb-17

Total
units
462

42.4

84.8

Year 3 &
beyond
127.3

Nov-16

156

156

100%

38.2

76.5

114.7

n.a.

n.a.

n.a.

835

Jun-17

381

161

42%

28.2

56.5

84.7

1,960

1,887

-4%

CCR

228

Apr-16

54

45

83%

15.2

30.4

45.6

4,143

n.m.

n.m.

Wing Tai

CCR

201

Apr-16

43

39

91%

14.6

29.2

43.8

n.m.

n.m.

n.m.

Wheelock Properties

CCR

180

Dec-16

84

80

95%

13.7

27.4

41.1

n.m.

n.m.

n.m.

d'Leedon

CapitaLand & Hotel Properties

CCR

1339

Oct-16

1,715

190

11%

11.9

23.7

35.6

1,555

1,724

11%

The Interlace

CapitaLand & Hotel Properties

RCR

548

Sep-15

1,040

140

13%

5.9

11.8

17.7

1,037

1,199

16%

iLiv @ Grange

Heeton Holdings

CCR

73

Oct-15

30

30

100%

5.8

11.7

17.5

n.a.

n.a.

n.a.

Goodwood Residence Guocoland

CCR

279

Jun-15

210

41

20%

4.4

8.7

13.1

2,316

2,285

-1%

Starlight Suites
Waterscape At
Cavenagh
Tomlinson Heights

King Wan & TA Corporation

CCR

120

May-16

105

31

30%

2.8

5.7

8.5

2,081

2,216

6%

Hiap Hoe

CCR

119

Sep-16

200

50

25%

2.4

4.8

7.1

1,878

n.m.

n.m.

Hotel Properties
CCR
Heeton Holdings, Koh Brothers Group,
CCR
KSH Holdings and Lian Beng Group

52

Mar-16

70

36

51%

2.1

4.3

6.4

3,021

2,884

-5%

243

Apr-16

175

11

6%

1.2

2.4

3.7

1,884

n.m.

n.m.

RCR

133

Oct-16

250

25

10%

1.1

2.1

3.2

1,423

1,512

6%

Lincoln Suites

Cityscape @Farrer
KSH Holdings/ IOI
Park
Palms @ Sixth Avenue MCL Land

First 3
months
2,834

Last 3
months
2,872

%
change
1%

CCR

80

Feb-17

32

16%

1.0

2.0

3.0

1,159

1,067

-8%

The Peak @ Cairnhill I Tee International and TG Development

Heeton Holdings, KSH Holdings, and
The Boutiq
TEE International
Urban Resort
CapitaLand
Condominium
Hijauan
Selangor Dredging Bhd

CCR

17

Sep-16

52

21

40%

0.5

1.1

1.6

2,735

n.m.

n.m.

CCR

122

Oct-16

130

5%

0.5

1.1

1.6

2,321

2,246

-3%

CCR

161

Mar-15

64

3%

0.4

0.8

1.2

2,755

2,248

-18%

CCR

42

Feb-17

41

7%

0.2

0.5

0.7

2,342

1,921

-18%

18 Woodsville

SP Setia

RCR

65

Jun-17

101

4%

0.2

0.4

0.6

1,775

1,584

-11%

Hallmark Residences

MCL Land

CCR

95

Jan-17

75

3%

0.2

0.4

0.6

1,939

1,831

-6%

The Cristallo

TA Corporation

OCR

21

Feb-17

74

9%

0.2

0.3

0.5

1,309

1,211

-7%

Flamingo Valley

Frasers Centrepoint Ltd

OCR

194

Aug-16

393

1%

0.1

0.2

0.2

1,296

1,307

1%

The Aristo @ Amber

Goodland Group & AG Capital

RCR

Oct-15

56

4%

0.0

0.1

0.1

1,267

1,613

27%

Note 1: CCR = prime segment (core central region), RCR = mid-market (rest of central region), OCR = mass-market (outside central region). #Deadlines to sell are 2 years from the project's
expected completion date. ~QC fees are calculated assuming no additional units are sold. ^Average selling prices (ASP) are based on caveats lodged on URA Realis, and includes primary
and secondary sales. First 3 months refer to when the project was initially launched. Last 3 months refer to the latest 3 months of transaction, typically Nov 2015 to Jan 2016. Source:
Company data, URA, Credit Suisse
03 February 2016

Singapore Property Sector

Figure 21: Projects potentially impacted by additional buyers stamp duty (ABSD) (sorted by largest ABSD charge)
Developer

Area

Award
date

Land cost Deadline Total

(S$ mn)
to sell
units

03 February 2016

As at Dec 2015
ASP (S$ psf)^
Est ABSD
Cost (S$ First 3
Units Units
%
Last 3
%
mn)~
sold unsold Unsold
months months change
The Crest
Wing Tai, Metro & UE
RCR
Sep-12
516
Sep-17
469
100
369
79%
65.9
1,802
1,722
-4%
Sky Vue
CapitaLand & Mitsubishi Estate
RCR
Dec-12
505
Dec-17
694
591
103
15%
64.5
1,432
1,544
8%
The Glades
Keppel Land & China Vanke
OCR
Oct-12
435
Oct-17
726
371
355
49%
55.5
1,482
1,433
-3%
The Trilinq
IOI
OCR
Jan-12
408
Jan-17
755
220
535
71%
52.1
1,508
1,356
-10%
Echelon
CDL & Hong Leong
RCR
Dec-11
396
Dec-16
508
505
3
1%
50.5
1,795
n.m
n.m
Bartley Ridge
CDL, Hong Long & TID
RCR
Jan-12
388
Jan-17
868
865
3
0%
49.5
1,287
n.m
n.m
La Fiesta
EL Development
OCR
Jun-12
383
Jun-17
810
800
10
1%
48.9
1,175
1,128
-4%
eCO
Far East, FCL & Sekisui
OCR
Feb-12
346
Feb-17
748
725
23
3%
44.2
1,314
1,260
-4%
Alex Residences
SingLand
RCR
Dec-12
333
Dec-17
429
255
174
41%
42.5
1,698
1,787
5%
Jewel @ Buangkok
CDL
OCR
Jun-12
301
Jun-17
616
568
48
8%
38.4
1,197
1,150
-4%
Thomson Three
UOL & SingLand
RCR
Aug-12
292
Aug-17
445
437
8
2%
37.3
1,361
1,329
-2%
Forestville
Hao Yuan
OCR
May-12
247
May-17
653
629
24
4%
31.5
731
752
3%
The Venue Residences
CDL & Hong Leong
RCR
Sep-12
245
Sep-17
266
104
162
61%
31.3
1,436
1,389
-3%
The Skywoods
Hock Lian Seng & Meadows Bright
OCR
Sep-12
244
Sep-17
420
368
52
12%
31.1
1,280
1,178
-8%
Kingsford . Hillview Peak
Kingsford Development
OCR
Mar-12
243
Mar-17
512
242
270
53%
31.0
1,331
1,292
-3%
SkyPark Residences (EC)
JBE Holdings
OCR
Dec-12
212
Dec-17
506
474
32
6%
27.1
797
771
-3%
Vue 8 Residence
Capital Development
OCR
Jun-12
211
Jun-17
463
285
178
38%
26.9
1,024
983
-4%
Sea Horizon (EC)
Hao Yuan
OCR
Nov-12
207
Nov-17
495
485
10
2%
26.4
815
784
-4%
The Creek @ Bukit
Chiu Teng Group
RCR
Sep-12
192
Sep-17
260
116
144
55%
24.5
1,628
1,487
-9%
Ecopolitan
Qingjian Realty
OCR
Sep-12
190
Sep-17
512
495
17
3%
24.2
791
784
-1%
Seventy Saint Patrick's
UOL
RCR
Dec-11
172
Dec-16
186
183
3
2%
22.0
1,631
1,532
-6%
Stratum
Elitist Development
OCR
Apr-12
166
Apr-17
380
364
16
4%
21.2
944
980
4%
Waterwoods
Sing Holdings
OCR
Dec-12
162
Dec-17
373
356
17
5%
20.7
800
798
0%
Twin Fountains
FCL & Lum Chang
OCR
Oct-12
150
Oct-17
418
414
4
1%
19.1
743
728
-2%
The Rise @ Oxley - Residences
Oxley Holdings
CCR
Nov-12
130
Nov-17
120
50
70
58%
16.6
2,409
2,247
-7%
Mon Jervois
SingLand
CCR
Feb-12
119
Feb-17
109
46
63
58%
15.2
2,053
1,838
-11%
Sant Ritz
Santarli Construction
RCR
Jul-12
115
Jul-17
214
190
24
11%
14.7
1,472
n.m
n.m
Pollen & Bleu
SingLand
CCR
Jun-12
113
Jun-17
106
12
94
89%
14.4
1,917
n.m.
n.m.
Floraview
Oxley, Unique and Goldprime
OCR
Mar-12
96
Mar-17
90
42
48
53%
12.3
1,294
1,222
-6%
The Quinn
Top Global
OCR
Mar-12
85
Mar-17
139
91
48
35%
10.8
1,575
1,472
-7%
Whitehaven
Roxy-Pacific
RCR
Jun-12
78
Jun-17
120
114
6
5%
10.0
1,589
n.m
n.m
Michaels' Residences
SCB Terraform
OCR
Dec-11
71
Dec-16
40
11
29
73%
9.1
1,488
n.m.
n.m.
Robin Suites
Goldhill Cap & Robin 25
CCR
Feb-12
54
Feb-17
92
65
27
29%
6.9
2,520
2,340
-7%
Robin Residences
Sing Holdings
CCR
Dec-11
52
Dec-16
134
73
61
46%
6.6
2,306
2,398
4%
Neem Tree
Aylesbury
RCR
Jun-12
46
Jun-17
84
17
67
80%
5.9
1,624
n.m.
n.m.
The Siena
Far East
CCR
Sep-12
46
Sep-17
54
31
23
43%
5.9
2,270
1,737
-23%
One Surin
ACT Holdings
OCR
Sep-12
38
Sep-17
27
6
21
78%
4.8
768
678
-12%
Liv on Wilkie
Roxy-Pacific and Harry Lin
CCR
Aug-12
33
Aug-17
81
65
16
20%
4.2
2,508
2,419
-4%
Liv on Wilkie
Roxy-Pacific and Harry Lin
CCR
Aug-12
33
Aug-17
81
65
16
20%
4.2
2,508
2,419
-4%
The Bently Residences@Kovan
Goodland Group
OCR
Apr-12
27
Apr-17
48
32
16
33%
3.4
1,481
n.m
n.m
# 1 Suites
The One Development
RCR
Jan-12
26
Jan-17
112
85
27
24%
3.3
1,196
1,162
-3%
Ascent @ 456
Quest Homes
RCR
Jan-12
24
Jan-17
28
15
13
46%
3.1
1,471
n.m.
n.m.
28 RC Suites
Sysma Properties
RCR
Aug-12
23
Aug-17
45
42
3
7%
2.9
1,641
n.m
n.m
Rezi 3Two
TEE, KSH and Heeton
RCR
Sep-12
23
Sep-17
65
43
22
34%
2.9
1,469
1,513
3%
Note: CCR = prime segment (core central region), RCR = mid-market (rest of central region), OCR = mass-market (outside central region). #Deadlines to sell are 5 years from the project's
award date. ~ABSD charges are calculated assuming not all units in each project are sold by the deadline. ^Average selling prices (ASP) are based on caveats lodged on URA Realis, and
includes primary and secondary sales. First 3 months refer to when the project was initially launched. Last 3 months refer to the latest 3 months of transaction, typically Nov 2015 to Jan 2016.
Source: Company data, URA, Credit Suisse
Project

03 February 2016

Weak macro supportive of policy easing

Rising interest rates fundamentally negative, a "cooling measure" in itself
Three-month SGD SIBOR, the most common reference rate for housing loans, has
continued to rise, reaching 1.25% as at 14 Jan, with CS economists expecting SIBOR to
rise to 2% by end-2016. While the residential market has benefited from positive rental
carry given the record low interest rates, we expect spreads to narrow considerably in
2016E, against the prospects of weakening rentals.
Similarly, while affordability remains healthy, the Monetary Authority of Singapore (MAS)
estimates that pockets of risk remain, and 5-10% of households with debt-servicing ratios
above 60% could be vulnerable to rising interest rates, in addition to households with
multiple housing loans for investment properties. The ability to withstand rising rates is
nevertheless contingent on the financial holding power of homeowners and investors, and
tied to the household employment situation.
Figure 22: Rental carry less attractive, with rising rates

Figure 23: Credit Suisse expects unemployment to reach

and declining rents

2.2% in 2015E
(%)

Rental Yield (%)

7.00

5.0
4.5

6.00

4.0

3.74
3.38

3.5
3.0

5.00
4.00

2.0
1.5
1.0

1.25

3.00
2.00
CS 2015E
estimate: 2.2%

1.00

CS 3M SIBOR Estimate

Source: CBRE, URA, the BLOOMBERG PROFESSIONAL service,

Overall unemployment rate

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

Mar-03

Mar-02

Mar-01

Mar-00

Mar-99

3Q16

1Q16

3Q15

1Q15

3Q14

1Q14

3Q13

1Q13

3MSIBOR

3Q12

1Q12

3Q11

1Q11

3Q10

Islandwide

1Q10

3Q09

1Q09

3Q08

Prime

1Q08

3Q07

1Q07

3Q06

1Q06

3Q05

1Q05

3Q04

1Q04

3Q03

1Q03

Luxury

0.00

Mar-98

0.0

Mar-97

0.5

Mar-16

2.27

Mar-15

2.5

Resident unemployment rate

Source: URA, IRAS, Credit Suisse estimates

Credit Suisse estimates

Employment growth lowest since 2003, weak growth expected from 2016-2020
While overall and citizen unemployment has remained relatively stable at 1.9% and 3.0%
as at 4Q15, respectively, we note that 2015 total employment growth is estimated to have
increased by only 0.9%, the lowest YoY growth since 2003. This was, however, largely
driven by growth in foreign employment, with local employment only increasing marginally
by an estimated 100 in 2015, from 96,000 in 2014. Going forward, Manpower Minister Mr
Lim Swee Say expects local employment growth to be only about 1% from 2016 to 2020.
Amidst a continued push by the government towards restructuring, redundancies rose
steadily since 2010 to 14,400 in 2015. A further worsening of the labour market and
resident employment situation could thus pose downside risks to property prices, and act
as a dampener to property demand.

Singapore Property Sector

10

03 February 2016

Figure 24: Credit Suisse expects unemployment to reach

Figure 25: Weak employment growth, with local

2.2% in 2015E

employment only up by 100 in 2015 vs. 96,000 in 2014

(%)

no. of ppl

7.00

Half-yearly changes in employment

60,000

6.00

50,000

5.00

40,000

4.00

30,000
20,000

3.00

10,000

2.00

Jun 15

Dec 15

Dec 14

Jun 14

Dec 13

Jun 13

Jun 12

Dec 12

Dec 11

Jun 11

Dec 10

Jun 10

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

Mar-11

Mar-10

Total Local Employment

-30,000

Resident unemployment rate

Source: Singstat, Credit Suisse estimates

Total Foreign Employment

-20,000

Jun 09

Overall unemployment rate

Mar-09

Mar-08

Mar-07

Mar-06

Mar-05

Mar-04

Mar-03

Mar-02

Mar-01

Mar-00

Mar-99

Mar-98

Mar-97

0.00

0
-10,000

Dec 09

1.00

Dec 08

CS 2015E
estimate: 2.2%

Source: Singstat

A recalibration of cooling measures in 2H16?

In its 2015 Financial Stability Review, the MAS noted that it will continue to monitor the
property market carefully for risks to financial stability and take appropriate measures to
maintain a stable and sustainable market.
In a report by The Business Times, while Minister for National Development Mr Lawrence
Wong noted that it was too early to talk about cooling measures, the government is
watching macro-economic indicators very carefully and will make adjustments when
necessary.
We continue to believe that a pre-emptive re-calibration of measures, rather than ex-post
corrective action will better achieve a stable and sustainable property market especially
when the specific policy intent of these measures has been achieved. Interestingly, there
has also been a recent call by a Member of Parliament, Mr Christopher De Souza, to
remove ABSD for Singaporeans, in the spirit of flexibility and desire to adopt a calibrated
approach towards the property cooling measures.
With targeted schemes and housing grants in place, we believe there is now room for an
easing of cooling measures, thus allowing the government to ensure affordability and
housing availability, while preventing further erosion of household assets for 90% of the
resident population who are homeowners.
Figure 27: while foreigner buying has also fallen

Figure 26: Speculative activity has declined

Units

40%

30%
25%

250

12%

200

10%

20%

150

8%

15%

Sub-sales

Source: URA, Credit Suisse

Singapore Property Sector

Sub-sales % of total sales - RHS

5%
4%
3%

5%

CCR

RCR

OCR

4Q15

3Q15

2Q15

1Q15

4Q14

3Q14

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

0%

1Q12

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Oct-13

Jan-14

Jul-13

Apr-13

Oct-12

Jan-13

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

0%

Apr-10

2%

Jan-10

50

12%

10%

4Q11

4%

1Q10

6%

100

3Q11

14%

2Q11

300

35%

1Q11

16%

4Q10

350

18%

3Q10

20%

2Q10

400

Overall

Source: URA, Credit Suisse

11

03 February 2016

Figure 28: Average and median household incomes vs.

Figure 29: Top 20th and 30th percentile household

HDB resale prices (2000=100)

incomes vs. private property prices (2000=100)

200

200

180

180

160

160

140

140

120

120

100

100

Median household income

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

Average household income of 20th percentile

Average household income of 30th percentile
URA Private property price index

HDB Resale price index

Source: URA, HDB, Singstat, Credit Suisse

2005

2004

2003

2002

2000

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Average household income

2001

80

80

Source: URA, HDB, Singstat, Credit Suisse

CDL our preferred pick

We have recently added CDL to our CS AxJ Focus List (full report), and believe multiple
catalysts lie ahead for CDL, with further upside likely to be driven by potential: (1) further
asset divestments to unlock portfolio value, (2) upside surprise on dividends in its FY15
results, (3) re-inclusion into the FTSE EPRA/NAREIT index in mid-2016, and (4) tweaking
of Singapore residential policy measures in 2H16.
Dividend surprise in FY15 results on 25th Feb?
With the completion of its 2nd PPS deal (full report), where CDL divested a 60% stake in
three office assets to Alpha Investment Partners, CDL has reaped a cash inflow of c.
S$850mn (after transactions costs) and P&L gain of S$227 mn. In 2014, CDL saw cash
inflows of S$1.1 bn, while investing S$1.3 bn overseas. In 2015, we estimate inflows of
c.S$850 mn, with overseas investments of c.S$700 mn.
While CDL does not have a specified payout ratio, we believe there could be room for
upside surprise on dividends in its FY15 results; an additional S$150 mn of dividends
would imply additional DPS of 16.5 cents/share. Our DPS forecast of 16 cents/share in
2015 (flat YoY) has not accounted for this possibility, hence FY15 dividend yields could
potentially go up to 4.6% based on the current price of S$7.00.
Figure 30: Dividend and payout ratio history of CDL
(S cts/share)

2005

2006

2007

2008

2009

2010

2011

2012

2013

DPS

12.5

25

30

7.5

18

18

13

16

16

16

22

38

80

59

65

71

56

60

55

50

56

56%

65%

38%

13%

12%

25%

32%

22%

29%

32%

29%

Core EPS
Payout

2014 2015E

Source: Company data, Credit Suisse estimates

Singapore Property Sector

12

03 February 2016

Figure 31: CDL Premium/(discount) to RNAV

Figure 32: CDL Price-to-book

(%)
80
60
40
20

17.7

-7.2

-20

-32.2
-45.5

-40
-60
-80
Dec-90

-52.8
Dec-94

Dec-98

CIT Prem/(disc) to RNAV

Dec-02

Dec-06

Dec-10

Mean - (7.2)%

Source: Thomson Reuters, Credit Suisse estimates

Singapore Property Sector

Dec-14
1 std

P/B
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jan-88

2.65
1.86
1.07
0.73
Jan-92

Jan-96

City Dev. - P/B

Jan-00

Jan-04

Jan-08

Average - 1.86

Jan-12

Jan-16

1 std. dev.

Source: Thomson Reuters, Credit Suisse estimates

13

03 February 2016

Companies Mentioned (Price as of 02-Feb-2016)

CapitaLand (CATL.SI, S$2.99, NEUTRAL, TP S$3.5)
City Developments (CTDM.SI, S$7.0, OUTPERFORM, TP S$12.0)
Frasers Centrept (FRCT.SI, S$1.685)
Goodland Group (GLGP.SI, S$0.27)
GuocoLand (GUOC.SI, S$1.72)
Heeton Hldgs (HEET.SI, S$0.465)
Hiap Hoe (HIAP.SI, S$0.68)
Hongkong Land (HKLD.SI, $6.17)
Hotel Properties (HPPS.SI, S$3.59)
IOI Corporation (IOIB.KL, RM4.62)
KSH Hold (KSHH.SI, S$0.51)
King Wan Corp (KIWC.SI, S$0.205)
Koh Brothers (KBRO.SI, S$0.27)
Lian Beng Group (LIBG.SI, S$0.44)
OUE Ltd (OVES.SI, S$1.655)
SDB (SDGS.KL, RM0.91)
SP Setia (SETI.KL, RM2.88)
TA Corporation (TACO.SI, S$0.285)
TEE (TEEI.SI, S$0.235)
Wheelock Prop (WPSL.SI, S$1.38)
Wing Tai Holdings (WTHS.SI, S$1.545)

Disclosure Appendix
Important Global Disclosures
Louis Chua and Nicholas Teh each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in
this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation
was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for CapitaLand (CATL.SI)
CATL.SI
Date
21-Feb-13
19-Sep-13
11-Oct-13
20-Feb-14
14-Apr-14
10-Jun-14
29-Jan-15
09-Apr-15
25-Nov-15

Closing Price
(S$)
3.90
3.24
3.16
2.86
2.92
3.21
3.54
3.60
3.11

Target Price
(S$)
4.53
4.53
4.46
4.46
4.70
3.50

Rating
O
R
O
R
O
*
N*

* Asterisk signifies initiation or assumption of coverage.

O U T PERFO RM
REST RIC T ED
N EU T RA L

3-Year Price and Rating History for City Developments (CTDM.SI)

CTDM.SI
Date
28-Feb-13
27-Feb-14
14-Aug-14
16-Feb-15
09-Apr-15
25-Nov-15

Closing Price
(S$)
11.08
9.27
9.70
10.22
10.68
7.44

Target Price
(S$)
13.49
12.02
12.20
12.25
12.00

Rating
O

*
O*

* Asterisk signifies initiation or assumption of coverage.

O U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's
total revenues, a portion of which are generated by Credit Suisse's investment banking activities

Singapore Property Sector

14

03 February 2016

As of December 10, 2012 Analysts stock rating are defined as follows:

Outperform (O) : The stocks total return is expected to outperform the relevant benchmark* over the next 12 months.
Neutral (N) : The stocks total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stocks total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stocks total return relative to the analyst's coverage universe which
consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and
Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stocks total
return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the
most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings
are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian
ratings were based on (1) a stocks absolute total return potential to its current share price and (2) the relative attractiv eness of a stocks total return potential within
an analysts coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 1 2-month rolling dividend yield. An
Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned
where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18
May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July
2011.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.
Analysts sector weightings are distinct from analysts stock ratings and are based on the analysts expectations for the fundamentals and/or
valuation of the sector* relative to the groups historic fundamentals and/or valuation:
Overweight : The analysts expectation for the sectors fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analysts expectation for the sectors fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analysts expectation for the sectors fundamentals and/or valuation is cautious over the next 12 months.
*An analysts coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating

Versus universe (%)

Of which banking clients (%)

Outperform/Buy*
56%
(36% banking clients)
Neutral/Hold*
31%
(29% banking clients)
Underperform/Sell*
12%
(42% banking clients)
Restricted
1%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely
correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
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Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-andanalytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for the purposes of avoiding any penalties.
Target Price and Rating
Valuation Methodology and Risks: (12 months) for CapitaLand (CATL.SI)
Method: Our target price of S$3.50 for CapitaLand is pegged at a 16% discount to our reappraised net asset value (RNAV) per share of S$4.21.
The RNAV is calculated based on CapitaLand's portfolio of assets. For residential properties, we estimate net present value (NPV) of net
profits from its residential properties based on our assumed take-up schedule and selling prices over the next ten years using a 8% and
12% discount rate for Singapore and China respectively. For the subsidiaries we cover, we have used the respective target prices for our
RNAV. Given the limited upside available to our price target and given that valuations while undemanding are not compelling at 0.76x P/B
(-0.5 S.D. from historical averages), we continue to rate the stock Neutral.

Singapore Property Sector

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03 February 2016

Risk:

The main risk to our target price of S$3.50 and Neutral rating for CapitaLand is if the real estate markets in the countries in which the
company is present do not perform as forecast. This would lead to revisions to our NAV assumptions and thereafter target price revisions.
Given that a majority of earnings are dervied from Singapore and China, any government policy changes in these countries would also be
a key risk.

Target Price and Rating

Valuation Methodology and Risks: (12 months) for City Developments (CTDM.SI)
Method: Our target price of S$12.00 for City Developments is pegged at 6.8% discount to our reappraised net asset value (RNAV) of S$12.85. The
RNAV is calculated based on CDL's portfolio of assets in which a 3.8-7% capitalisation rate is assumed for its investment properties. For
residential properties, we estimate net present value (NPV) of net profits from its residential properties based on our assumed take-up
schedule and selling prices over the next ten years using an 8% to 12% discount rate for Singapore and Overseas respectively. Given the
significant upside available to our price target and given that the stock is trading at a 41% discount to RNAV, we continue to rate the stock
Outperform.
Risk:

The main risk to our target price of S$12.00 and Outperform rating for City Developments is if the real estate market in the countries which
the company is presently in do not perform as forecasted and hence would lead to downward revisions to our RNAV assumptions and
target price thereafter. Given that a majority of earnings are dervied from Singapore residential sales, any government policy changes
surrounding the property cooling measures in Singapore would also be a key risk.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the
target price method and risk sections.
See the Companies Mentioned section for full company names

The subject company (CTDM.SI, CATL.SI) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of
Credit Suisse.
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (CTDM.SI, CATL.SI) within
the next 3 months.
Credit Suisse has a material conflict of interest with the subject company (CATL.SI) . Credit Suisse (Singapore) Limited is acting as a joint financial
advisor to Sound Investment Holdings Pte Limited, a wholly-owned subsidiary of CapitaLand Limited, regarding its proposed voluntary conditional
cash offer for the shares in CapitaMalls Asia Limited.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.
The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse
does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.
Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares;
SVS--Subordinate Voting Shares.
Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not
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For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.creditsuisse.com/sites/disclaimers-ib/en/canada-research-policy.html.
Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (CATL.SI) within the past 3
years.
As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
Principal is not guaranteed in the case of equities because equity prices are variable.
Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.
To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important
disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research
analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the
NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a
research analyst account.
Credit Suisse AG, Singapore Branch .......................................................................................................... Louis Chua ; Nicholas Teh ; Daniel Lim
For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.creditsuisse.com/disclosures or call +1 (877) 291-2683.

Singapore Property Sector

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03 February 2016

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