Keppel Land - Analyst Report - Residual Income Valuation

1. Industry & Economic Characteristics Keppel Land is basically in the business of property trading and property blood management. As of 2004, 90% of Keppel Lands r as yetue comes from property trading and investment. We after part categorise these activities under the real estate industry. The biggest worry with the Real landed estate industry is that it is extremely uncertain. prop prices are extremely explosive and have no peculiar(prenominal) pattern. This is mainly due to 2 fundamental issues: * watercourse bevel accounting practices * The time retardation between occupy bode and actual supply It is these factors which create the property bubble . * clip Lag between Demand mark and Actual tally Property development has a cycle of 2-3 years. Owing to much(prenominal) a huge lag in time, it is possible that even the subscribe for the particular properties to change. Thus, it is possible for 10% enlarge in demand to produce a 50% increase in supply. It h as happened in Singapore as well when the property values reached their lift in 1997 only to fall by 40% in 2004. * Current Bank Accounting Practices Consumers continuously depend on banks to finance their property purchases. Banks, on the other hand fund these purchases as an increase in their value also actor an increase of the banks assets.

However, it must be noted that a banks willingness in lend is directly proportional to the economy of the country. In measure of recession, banks cut back lending sharply because property prices are expiration implement affecting their balance sheets drastically. When this happens, few people can devote to buy property, thus posing a immens e chore to the real estate industry. Now, ! the demand for property is primarily impelled by population growth and a go economy. existence growth in a country only when room more demand for housing. Keppel... If you want to get a rich essay, order it on our website: OrderEssay.net

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