UOL has enough catalysts to remain a top pick despite the stock’s 39% gain year to date

[SINGAPORE] Property developer UOL has been on a bull run recently. And it might be entering a new growth phase.

In the year to Tuesday (Aug 19), the stock is up 39 per cent at S$7.19, after hitting a multi-year high of S$7.30 on Aug 14.

Already, Singapore’s largest developer by market capitalisation has been busy building up its pipeline of prime residential sites, completing major asset enhancement initiatives and redeveloping its Central Business District (CBD) assets. 

UOL launched Watten House in March last year, Meyer Blue last October, Parktown Residences this February and Upperhouse this July. These projects all sold between 50 and 87 per cent of their units over their launch weekends. 

The group has a Holland Drive project, Skye at Holland, for which it is planning to start previews in September. UOL will also be redeveloping Thomson View Condominium, which it bought together with CapitaLand Development in October 2024, into a 1,240-unit project at a later date. 

So far, UOL has spent close to S$4.2 billion together with its joint venture partners to acquire land for these six projects. 

The developer had been comparatively subdued in the period from 2020 to 2023, when it launched one residential project a year in Singapore. Even before the Covid-19 pandemic, it was not as active, with only two launches a year between 2018 and 2019. 

In its latest financial results for the first half of 2025, UOL reported a 58 per cent increase in net profit to S$205.5 million. 

Revenue from property development increased by 40 per cent to S$210 million compared to the year-ago period, due to progressive revenue recognition from Pinetree Hill, Watten House and Meyer Blue. 

In the second half of the year, revenue recognition from UOL’s four newest condominium launches will likely start trickling in, which should bode well for the developer’s full-year results. 

Parktown Residences will likely deliver a big boost. The integrated development sold more than 87 per cent of its 1,193 units during its launch in February 2025. This remains one of the highest take-up rates for a new launch this year. 

Upperhouse at Orchard Boulevard, which was launched in July, also did well. It was the best-selling Core Central Region project since Midtown Modern was launched in 2021, moving 162 or more than 53.8 per cent of its 301 units at an average price of S$3,350 per square foot (psf).

This record has since been beaten by Wing Tai’s River Green, which sold 88 per cent of its units at an average of S$3,130 psf in the same month. 

UOL’s success with its recent projects is testament to how the developer is able to appeal to both the mass market and luxury segments of buyers.

Some of these projects, such as Upperhouse and the redevelopment of Thomson View, are also located along the newly opened Thomson-East Coast Line, bringing connectivity which buyers will appreciate. 

CGS International, Citi and DBS Research all ranked UOL as their top pick among listed Singapore developers in reports published earlier this year. 

Solid margins

DBS analysts Derek Tan and Tabitha Foo rated UOL a “buy”, with a target price of S$8.50 in March. 

They noted how both Upperhouse and Skye at Holland were sites acquired at significantly lower land costs, which could drive an expansion in UOL’s development margins and support higher profitability in the medium term. 

The site on which Upperhouse sits was acquired for S$1,616 psf per plot ratio (ppr) in February 2024. This is 32 per cent lower than the S$2,377 psf ppr that SC Global and Hong Kong-listed FEC Properties and New World Development paid in May 2018 for a nearby site, which is now Cuscaden Reserve. 

UOL bought the site on which Skye at Holland will be built at S$1,285 psf ppr in May 2024. This was 32 per cent lower than the S$1,888 psf ppr paid by a consortium led by Far East Organization for the site next to it – which has since been developed into One Holland Village. 

For Skye at Holland, as long as UOL is able to move its units at S$2,700 psf, it should be able to achieve a comfortable 20 per cent margin, DBS Research estimated.  

Recurring income, diversified streams

UOL’s diversified portfolio and its strong presence in the commercial and hotel industries allow the group to generate recurring income streams, OCBC Investment Research said in August after the group reported earnings for H1. 

Besides its property development business, UOL also has its hospitality business, which it controls through its subsidiary Pan Pacific.

Its other subsidiary Singapore Land Group (SingLand) owns an extensive portfolio of prime office and retail assets in Singapore, Australia, China and the UK. 

In H1, UOL’s Singapore office portfolio had a committed occupancy of 96.6 per cent, while its retail portfolio had a committed occupancy of 97.3 per cent. Hotel occupancy edged up to 77 per cent in H1. 

Now that the developer has mostly completed its asset enhancement initiatives for Singapore Land Tower, this should lead to positive rental reversions as the supply of Grade A office space remains tight in the CBD. 

Piling works also began last year for SingLand’s redevelopment of its iconic Clifford Centre. When completed in 2028, the premium Grade A asset will have more than 52,000 square metres of office and retail space and will be directly connected to the Raffles Place MRT station.  

And if UOL and SingLand proceed with the proposed redevelopment of Marina Square, DBS Research believes the gross development value of the asset could increase to 4.5 times its existing value of S$1.05 billion upon completion. 

“This key value-unlocking activity is expected to drive the share prices of both groups higher,” DBS said. 

As for its hotel segment, UOL recently completed asset enhancement initiatives for Parkroyal Parramatta in Sydney and Pan Pacific Perth in May 2025. 

Both hotels are expected to benefit from the Australian Trade and Investment Commission’s projected 41 per cent increase in tourism arrivals in Australia between 2024 and 2028, which makes UOL’s strategic expansion into the Australia hospitality market timely. 

Will UOL maintain its lead?

UOL’s latest financial results have been strong, but chief executive Liam Wee Sin said the group will remain disciplined in its approach to portfolio management, project execution and capital deployment in a world adjusting to a new trade order. 

In May, Citi analyst Brandon Lee flagged several downside risks for UOL, such as cap rates expanding should interest rates rise, an economic slowdown, fall in tourism arrivals and the continuation of cooling measures for a prolonged period. 

For H1, Singapore’s gross domestic product growth averaged 4.2 per cent year on year, but the Ministry of Trade and Industry foresees “significant uncertainty and downside risks” in H2, given the lack of clarity over the US’ tariff policies. 

There is, however, a silver lining in sight, as interest rates have been falling since the start of the year. 

In January, the three-month compounded Singapore Overnight Rate Average was around 3.02 per cent. As at Tuesday, it was around 1.7 per cent. The rate may moderate further, as the US Federal Reserve is expected to cut interest rates in September. 

Lower interest expenses could drive UOL’s return on equity (ROE) higher. DBS Research estimates that a decline of 100 basis points in floating debt could lead to a 13 percentage point increase in ROE for UOL based on a sensitivity analysis. 

Given the low interest rate environment and the value that can be unleashed, perhaps it is a good time for UOL to redevelop Marina Square, should it obtain written permission from the Urban Redevelopment Authority to do so. 

While its net gearing ratio has inched up slightly in H1 to 0.25 from 0.23, the group’s balance sheet still remains healthy, which should allow it to maintain its strong momentum for the rest of the year.