OREANDA-NEWS. As noted in the Market Update yesterday (click here) the Real Estate Management & Development sector was amongst the best performers in January, generating an average total return of 7.0%. Real estate managers & developers play an essential role in the region, making productive use of its land to construct buildings and manage them to create quality living in both town and regional areas. Due to the large scale nature of these projects, an essential characteristic of many of the longest serving companies is that they often have very large market capitalisation.

The Straits Times Index (STI) has as many as four stocks that represent the Real Estate Development & Management Sector. These stocks are Hongkong Land Holdings (traded in USD), CapitaLand, Global Logistic Properties and City Developments. There used to be five plays in the STI , before CapitaMalls Asia was replaced with Ascendas REIT.

Over the past year the four STI stocks that currently represent the Real Estate Management & Development sector averaged a total return of 19.2%.  Three stocks generated gains, while Global Logistic Properties generated a decline over the 12 months. This brought the average three year total  return of the four stocks to 39.4%.

Before the reduced board lot size a stock portfolio balanced across the relevant STI stocks of the sector would require approximately S\\$40,000 based on this week’s prices. Effective 19 January, the standard board lot size of SGX-listed stocks was changed from 1,000 units to 100 units.  With the reduction in standard board lot sizes, it is now more cost-manageable for investors to include more stocks within a sectorial based investment. 

After the reduction in standard board lot sizes an investment which was close-to-evenly balanced in exposure to Hongkong Land Holdings, CapitaLand, Global Logistic Properties and City Developments would require just under  S\\$4,100. This is 10 times less the previous requirement of almost S\\$41,000.

While Hongkong Land Holdings would account for 24.7% of the Real Estate Developers portfolio, CapitaLand would account for 25.7%, Global Logistic Properties would account for 24.9% and City Developments would account for 24.7%. This is illustrated in the chart below. Please do note this is based on prices this week and does not take into account transaction fees.

STI Real Estate Management & Development Portfolio Example

The table below details the individual performances as well as an educative example on possible outlays in order to achieve balanced exposures across the four stocks and consideration required. 

Name SGX
Code		 Mkt Cap
S\\$ bn		 P/E Price
S\\$		 Shares to attain
portfolio balance		 Investment
Amount S\\$		 % of
Total
HONGKONG LAND HOLDINGS USD H78 23.6 15.1 10.031* 100 1003.10 24.7
CAPITALAND C31 14.8 15.3 3.480 300 1044.00 25.7
GLOBAL LOGISTIC PROPERTIES MC0 12.2 16.6 2.530 400 1012.00 24.9
CITY DEVELOPMENTS C09 9.1 15.9 10.050 100 1005.00 24.7