Singapore developer stocks fall after surprise property curbs

Shares of several developers and real estate service groups fell on Friday (July 6), a day after tough property cooling measures were introduced by the authorities.

The share price of Oxley Holdings dropped almost 16 per cent to 34 cents, while City Developments’ (CDL) shares closed at S$9.46, down 15.6 per cent. Wing Tai Holdings’ share price fell 6.9 per cent to S$1.89.

Propnex and APAC realty saw their stocks tumble by 24.6 per cent and 25.6 per cent, respectively.

On Thursday, the Government raised Additional Buyer’s Stamp Duty (ABSD) rates and tightened the Loan-to-Value (LTV) limits for Singapore citizens, permanent residents, and foreigners in a bid to “cool the property market and keep prices in line with economic fundamentals”.

“To me, it is quite shocking,” said Christine Li, senior director of research at real estate services firm Cushman and Wakefield in Singapore. “There will be a knee-jerk reaction in property stocks.”

Property companies have been buying land in government sales or in collective sales, where they purchase existing apartment blocks for re-building.

Developers that have added significantly to Singapore residential landbank include Oxley Holdings, CDL, Keppel Corp’s real estate division and Wing Tai Holdings, said Joel Ng, an analyst from KGI Securities.

Authorities have been cautioning as early as November against an “excessive exuberance” in the property market.

A fresh warning came this week, from the head of the Monetary Authority of Singapore, Ravi Menon, who said the recovery in the property market was welcome but should not veer too far from economic fundamentals.

Based on the land parcels that were sold in the past two years, there are some 28,000 to 30,000 private residential housing units that could be developed for launched in the next two years, said Nicholas Mak, executive director at ZACD Group.

“Private residential price growth will slow down and may even start to stagnate by the end of this year,” he added.

Source: Today – 6 Jul 2018

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