Downgrade in house price expectations in line with slowdown
UBS economists now expect Asia to grow at 6.1% (from 6.9%) and Singapore to grow at 1.5% (from 4.8%) in 2009.
We now expect prime residential launch prices to fall 20% from current levels (32% peak to trough) and prices to recover in 2011.
Buyers who bought in 07 could seek to default if prices fall more than 20%
In 2007, developers sold 14,700 units, of which around 40% were in prime districts and the Central Area. We believe around 50% of the units could be bought on deferred payment schemes where buyers pay 20% of the purchase price at launch and the remaining at completion, expected in 2010-2011. If prices fall more than 20%, we think some buyers may seek to default on the transactions.
Wheelock, SC Global, Keppel Land, Ho Bee and Wingtai are most affected
Depending on the buyers' ability to pay, the market demand for reselling the unit and legal costs involved, we believe developers can choose to sue buyers who default for unpaid debt, or to treat the sale and purchase agreement as repudiated. For the latter, if prices fall by 30%, developers can forfeit 20% of the purchase price but lose 10%. We conservatively assume the impact could be 10% of the projects' revenue if 40% of buyers default, in the worst case scenario.
Remain cautious on residential developers
We remain cautious on Singapore residential developers and maintain Neutral ratings for City Dev, Keppel Land and Allgreen, and CapitaLand.
UBS economists now expect Asia to grow at 6.1% (from 6.9%) and Singapore to grow at 1.5% (from 4.8%) in 2009.
We now expect prime residential launch prices to fall 20% from current levels (32% peak to trough) and prices to recover in 2011.
Buyers who bought in 07 could seek to default if prices fall more than 20%
In 2007, developers sold 14,700 units, of which around 40% were in prime districts and the Central Area. We believe around 50% of the units could be bought on deferred payment schemes where buyers pay 20% of the purchase price at launch and the remaining at completion, expected in 2010-2011. If prices fall more than 20%, we think some buyers may seek to default on the transactions.
Wheelock, SC Global, Keppel Land, Ho Bee and Wingtai are most affected
Depending on the buyers' ability to pay, the market demand for reselling the unit and legal costs involved, we believe developers can choose to sue buyers who default for unpaid debt, or to treat the sale and purchase agreement as repudiated. For the latter, if prices fall by 30%, developers can forfeit 20% of the purchase price but lose 10%. We conservatively assume the impact could be 10% of the projects' revenue if 40% of buyers default, in the worst case scenario.
Remain cautious on residential developers
We remain cautious on Singapore residential developers and maintain Neutral ratings for City Dev, Keppel Land and Allgreen, and CapitaLand.
learn man!, when this people appear on whatever...and recommend a good buy...it always a good bye for you!...for them, you made a good buy! 
