■ Residential on a recovery path. Amid a cyclical recovery, we expect price increases of 4-6%, slightly below CS Singapore’s GDP growth forecast of 6%. Residential resilience in 2020 was also in line with broad-based asset appreciation seen in Singapore, given relative market stability. We expect steady underlying demand and improving sentiment to support the 27% rise in 2021 volumes to c. last 10 year averages, with volume risks to the upside.

■ Redevelopments set to unlock portfolio value. As evidenced by robust CBD office transaction values in 2020 despite macro concerns, we expect the theme of redevelopments to drive long-term value creation for developers in 2021, allowing developers to unlock portfolio value within mature buildings while enhancing returns. CDL and UOL, with their extensive albeit mature asset holdings, are likely key beneficiaries of the government’s urban rejuvenation incentive schemes. Regardless, we expect capital recycling to remain a focus, as developers divest non-core assets while mining their existing portfolio for attractive redevelopment opportunities to achieve the ‘highest and best use’ for their portfolios.

■ Company-specific restructuring continues. Potential catalysts for our OUTPERFORMrated stocks include: CDL – unlocking of value from M&C portfolio, actualisation of plans for Sincere and spinoff of assets into potential REIT. CAPL – resumption of an accelerated pace of capital recycling driving ROEs towards CAPL’s target of 10%. UOL– continued progress towards attaining full control of UIC, gaining access to the wealth of restructuring upside within its portfolio, redevelopments of Marina Square & KH KEA/Odeon Towers.

■ Significant scope for a further sector re-rating; CDL top pick. Amidst attractive sector valuations at 0.66x P/B (-0.8 SD below hist. averages), coupled with our view that we are only at the nascent stage of a recovery in the Singapore residential market, we believe there remains scope for a re-rating of the sector, with CDL (OUTPERFORM, TP S$9.80) being our top pick. We also like UOL (OUTPERFORM, TP S$9.20) and CAPL (OUTPERFORM, TP S$4.00), while we have a NEUTRAL rating on FPL.