With prices of property stocks still low, analysts are bullish on the more promising CapitaLand Investment, City Developments (CDL) and UOL.

In a report, Galaxy-CIMB Research (CGS-CIMB) said that the decline in new private home sales in December last year was mainly driven by a lack of new project launches, low inventory and school holidays.

With the first new private housing project of the year, Sceneca Residence, selling well after its opening last week, new private housing sales are expected to be on par with last year, ranging from 7,000 to 8,000 units, with prices expected to rise by as much as 3 per cent.

The report has a "buy" rating on a number of property stocks and recommends CapitaLand, City Developments and Huaye Group.

Among them, CapitaLand, one of Asia's largest real estate investment managers, has performed well in asset management and allocation and operations, which will support the return on equity and share price gains.

CapitaLand's share price is 23% below its revalued net asset value (RNAV).

City Developments will launch around 2,000 private residential units, which will help increase the group's revenue. The recovery of the hotel business will also be a catalyst for the share price to rise. Its share price is 52% below RNAV.

In addition to having stable recurrent income from rentals and accommodation fees, the Wah Yip Group has also expanded the Group's presence in the office market. Its share price is 49 per cent below RNAV.

Vijay Natarajan, an analyst at Societe Generale, is also bullish on Urban Development. He says that City Developments will not only launch many new projects, but has also been actively integrating older assets into the development's portfolio.

He also sees prices for new private housing rising by up to three per cent this year. He said that in addition to rising land prices and construction costs, as well as the limited inventory available to developers, demand from HDB uplifters and high yields from rents were also driving prices up.

However, as twice as many new private homes are being launched this year as in the previous year, buyers will have more choices, slowing down the rise in housing prices, with projects close to amenities such as popular schools and MRT stations becoming more popular with buyers.

FSMOne.com's Senior Research Analyst for Research and Portfolio Management, Yeoh Hui Shih, said that the return of buyers following the re-opening of China would have a positive impact on new private home sales.

In addition, the large number of unbooked sales of residential projects will give property companies a steady income in the coming years. And new project launches and share buybacks will help boost share prices.

For the selection of local real estate stocks, Yeoh Wai Sze believes that the geographical diversification of a company's business and having recurring revenue are important indicators to consider. In addition, reasonable land acquisition costs and the attractiveness of the development's location to buyers should also be of concern to investors.

In contrast, Dr Han Wei, Portfolio Manager at Phillip Securities, is more cautious about the trend of real estate stocks.

He believes that real estate stocks have limited upside until interest rates retrace. High interest rates not only lead to higher construction costs for developers, but also discourage buyers from purchasing homes.

In the short term, real estate stocks are not actively traded and share prices lack the momentum to continue rising.

In the longer term, the cooling measures have driven up the cost of home ownership for foreign buyers, including those from China, discouraging some buyers. Even if China reopens, it will take some time for returning buyers to digest the new policies.