Expect home prices to drop 5-15% by 2015: Barclays

Tougher times ahead for Singapore developers.

Barclays maintains its negative stance on the Singapore Residential property sector, and estimate prices will fall 5% in 2014 and another 5-15% in 2015.

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We await the May launch of Commonwealth Towers, a 845-unit project nearer to the Queenstown MRT station.

Even if April and May see a short-term recovery in developer sales as a result of these attractive projects, we expect fundamentals to deteriorate, given: 1) the ongoing government curbs; 2) looming oversupply; and 3) interest/mortgage rates are set to rise in 2H15.

We continue to prefer commercial REITs over the residential developers for relative fundamentals and valuations, with CapitaMall Trust, CapitaCommercial Trust and Ascendas REIT (all rated OW) remaining our top picks, while we maintain our UW ratings on City Developments and Keppel Land.

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