Singapore Property - Dissecting supply and Deferred Payment Scheme (DPS) risks

Total supply pipeline has eased 13% to 64,494 units from 1Q08.While completions this year will hit a six-year high of 11,102 units,next year’s expected 5,952 is a 15-year low and below historicalaverage. We expect some could be brought forward from 2011.

If we consider total housing supply including public housing,average supply of 24,000 during 2008-12 is 45% lower than the10-year historical average. This does not look excessive versusthe annual average 24,000 household formations (marriages).

9,000 uncompleted units are estimated to be still under DPS, ofwhich 35% is in CCR (prime), bulk in FY09-10. We believe the1,141 CCR DPS units this year have lower default risks as currentprices are not far from launch prices; key risk would be the 1,270CCR DPS units in 2010 that had been sold at peak prices.



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