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(prenominal) part categorise these activities under the real estate industry. The biggest hassle with the Real landed estate industry is that it is extremely uncertain. office prices are extremely explosive and have no special pattern. This is mainly due to 2 fundamental issues: * catamenia confide accounting practices * The time retardation between necessitate bode and actual supply It is these factors which create the property bubble . * eon Lag between Demand mark and Actual deliver Property development has a cycle of 2-3 years. Owing to much(prenominal) a huge lag in time, it is possible that even the use up for the particular properties to change. Thus, it is possible for 10% emergence in demand to produce a 50% increase in supp ly. It has 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 change is directly proportional to the economy of the country. In measure of recession, banks slenderise lending sharply because property prices are expiration bolt down affecting their balance sheets drastically. When this happens, few people can put up with to buy property, thus posing a immense occupation to the real es! tate industry. Now, the demand for property is primarily determined by population growth and a go economy. state growth in a country only when convey more demand for housing. Keppel... If you want to get a overflowing essay, order it on our website: OrderEssay.net

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