The second project to be launched after 5-Jul-18’s cooling measures, The Tre Ver, sold 140-150 units during its first weekend of launch, with average pricing of S$1,500-1,600 psf in line with our estimates and should yield a solid PBT margin of 17-22% for UOL.
However, we are slightly disappointed at the take-up, given over 300 cheques collected beforehand and its competitive pricing vs. recently launched Park Colonial.
We believe prospective buyers are maintaining their wait-and-see approach, with an eye on two upcoming nearby launches (Jadescape and Jui Residences) which have a lower land cost and imply an even lower selling price than The Tre Ver.
Also read: Tre Ver Condo at Potong Pasir
We think this launch performance could have some slight kneejerk negative share price impact on UOL, but view any weakness to buy the stock in view of: (1) undemanding valuations, with a P/B of 0.62x and an RNAV discount of 43% vs. means of 0.76x and a 30% discount; (2) competitively priced landbank; and (3) the potential acquisition of the remaining stake in UIC. Maintain OW.
140-150 units sold at The Tre Ver, a 99-year leasehold 729-unit mid-end condominium along Potong Pasir Avenue 1 jointly developed by UOL and its 50.1%-owned United Industrial Corporation (UIC). Most of the project (52%) comprises 2-bedders, followed by 3-bedders (22%) and 1-bedders (22%).
The project is located just 10/15 minutes’ walk from the nearest MRT stations (Potong Pasir/Woodleigh), as well as near several schools (St. Andrews Secondary School/Junior College, Stamford International School and Cedar Girls School) and the upcoming Bidadari Estate. It enjoys 220m of riverfront view of Kallang River.
Average pricing of S$1,500-1,600 psf, with low-floor 2-bedders starting from just below S$1,500 psf.
We think pricing is reasonable, as nearby 805-unit Park Colonial recently sold over 400 units for S$1,700-1,750 psf while further down the road at Bidadari Park Drive, The Woodleigh Residences’ expected launch price is S$1,900-2,200 psf.
Secondary projects within the vicinity (including Sennett Residences, The Venue Residences, Nin Residence and 8 Woodleigh) are trading at S$1,300-1,600 psf.
Based on our estimates, PBT margin of 17-22% is achievable on breakeven of S$1,252 psf.
Slightly better take-up of 19-21% than the 15% (50 units sold) for last week’s Daintree Residences (99-year leasehold 327-unit mid-end condominium along Toh Tuck Road), which was the maiden new launch after the cooling measures of 5-Jul-18.
Nonetheless, we are slightly disappointed at the sales performance, particularly given its competitive pricing.
Aside from buyers continuing to adopt a wait-and-see approach after the recent cooling measures, we think the subdued take-up could be attributable to competition from upcoming projects nearby such as 117-unit Jui Residences and 1,204-unit Jadescape, whose relatively lower land prices of S$747 psf and S$785 psf, respectively could imply even lower launch prices than The Tre Ver.