Property, airline, hotels get boost from S’pore F1 race: analysts

Property and tourism-related counters, as well as hotel REITs, perked up on news that Singapore is hosting a Formula One Grand Prix next year.

While the race is expected to bring some economic spin-offs, some market-watchers said they do not expect the glow effect to last throughout the entire franchise tenure.

Property players like Singapore Land, UOL Group and CDL hospitality REIT are seen as the biggest beneficiaries on news that Singapore has won the rights to host an F1 race for five years starting in 2008.

But analysts said blue chips in the banking and tourism sectors would also stand to gain.

Leslie Phang, Head of Investments (Asia), Commonwealth Private Bank, said: “Cathay Pacific benefited from the Olympics and we’re going to see the same effects on Singapore Airlines and the tourism sector. That’s going to be very, very positive.

“Other than the hotels, this has a spill-over effect on the general economy in terms of overall confidence of the consumers, of the people and of spending.”

Some 100,000 tourists are expected to visit Singapore during the race season.

And hoteliers are expected to be able to charge two or even three times their usual room rates.

That is why some analysts see UOL and Singapore Land, which own the most hotels and properties around the F1 route, as benefiting the most.

They said properties near the track often get re-evaluated upwards, albeit temporarily, during the racing period.

But market watchers warned that the banquet may not last the entire period of the franchise.

Mr Phang said: “If we look at Malaysia’s experience, it has benefited from the first or even the second race, but starting from the third race, the attendance has actually tapered off. So we wouldn’t be so confident as to say that this is a sustainable long-term effect. But it is certainly so for the first couple of years.”

Stocks seen as beneficiaries of having the F1 race in Singapore closed mostly higher on Monday, with UOL up 5 percent. Both Singapore Land and Singapore Airlines advanced nearly 2 percent.

However, Hotel Properties Limited (HPL) and Overseas Union Enterprise ended down. HPL had been surging ahead of the F1 announcement.

Source: Channel NewsAsia, 14 May 2007

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