The Asean property market is still attractive in 2020, as stocks will continue to outperform on healthy property fundamentals amid a constructive macro outlook, said Morgan Stanley in its report.

The investment banking giant said: “Stock valuation multiples in many instances remain below trend, and have yet to fully price in a positive macro and property outlook for the year.”

Morgan Stanley noted that gross domestic product growth is recovering in Asean and interest rates remain low, which forms a constructive macro environment for the property sector.

Morgan Stanley prefers Singapore stocks the most, followed by the Philippines, Vietnam and Indonesia, with Thailand at the bottom of the list.

It forecasts developer home sales in Singapore to increase by 15 per cent to S$15 billion in 2020, as home price and volumes rise further.

“Supply appears contained, while we see demand well supported by public housing upgraders and improving home buyer sentiment,” added Morgan Stanley.

In the Singapore market, Morgan Stanley prefers developer stocks to real estate investment trusts (Reits).

This is because developer stock valuations remain below trend, even after last year’s rally, while Reit valuations appear elevated, but should remain so amid low interest rates and a recovering economic outlook, said Morgan Stanley.

Meanwhile in Thailand, discounted stock valuations will likely persist into 2020 given a downbeat outlook for the Thai property sector, according to Morgan Stanley.

Morgan Stanley projects presale activity to remain flat in 2020, following its prediction that developer presales will fall by 25 per cent in 2019 – the sharpest decline in more than a decade.

Thailand’s economic growth outlook in 2020 also appears “relatively subdued”, noted Morgan Stanley.

Currency appreciation limits the pace of tourism and export recovery, while unsold inventory levels are at record highs, it added.