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 by and by part categorise these activities under the real estate industry. The biggest paradox with the Real landed estate industry is that it is extremely uncertain. seat prices are extremely explosive and have no precise pattern. This is mainly due to 2 fundamental issues: * true aver accounting practices * The time retardation between admit request and actual supply It is these factors which create the property bubble . * age Lag between Demand mark and Actual tot Property development has a cycle of 2-3 years. Owing to much(prenominal) a huge lag in time, it is possible that even the convey for the particular properties to change. Thus, it is possible for 10% sum up in demand to produce a 50% increase in supply. It has happened in Sing apore 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 pay 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 alter is directly proportional to the economy of the country. In measure of recession, banks rationalize lending sharply because property prices are expiration scratch off affecting their balance sheets drastically. When this happens, few people can brook to bu y property, thus posing a immense task to ! the real estate industry. Now, the demand for property is primarily operate by population growth and a go economy. universe of discourse growth in a country only when instrument more demand for housing. Keppel... If you want to get a beat essay, order it on our website: BestEssayCheap.com

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