Outlook in the property sector still remains uncertain. Whileproperty price index has remained resilient, the lack of transactionvolume, low take-up rate and delay in launches by developers raised moreconcerns about a deteriorating property market. Historically, lower priceswould follow after a period of sharp decline in volume and the expectationof slower rental rates growth provide an additional catalyst to dampenproperty prices going forward. In particular, we see the high-endproperties at greater risk to further price corrections, as there is stilla substantial pipeline of projects waiting to be launched. Mass marketsegment was weak in 1Q08, most probably due to fears of oversupply afterdevelopers rushed to launch their mass market projects during the period.Going forward, pipeline of mass market launches appear limited and thisshould ease concerns of oversupply and drive take-up rate higher. Wereiterate our NEUTRAL view on the Singapore residential property sector asour expectation of price weakness in the high end and price stability inthe mid to mass market properties remain unchanged. Thus, we remaincautious over developers that have large land bank exposure in the high endmarket, like CapitaLand and Keppel Land. We are currently reviewing ourcalls on CapitaLand, City Developments, Keppel Land and UOL Group due to achange in analyst coverage.
In the STimes today, there is a report of new launches being priced 10% lower. Could this be the start of more to come?
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