SINGAPORE – Singapore property stocks not only responded in muted fashion to the latest property cooling measures, but some even chalked up a relief rally during the Friday trading session.
City Developments, whose performance is often seen as a barometer for the property sector, closed just one cent lower at $7.60 on a volume of just 3.4 million shares.
UOL, another big property player here which sold almost all of its AMO Residence condominium stock on the first day of its launch in July, rose 21 cents to $6.65. CapitaLand Investment closed the day’s session eight cents higher at $3.47, while Wing Tai shed one cent to $1.52. GuocoLand closed unchanged at $1.65.
Property agency PropNex gave up four cents to $1.50, while competitor Apac Realty closed a cent down at 59 cents.
All this comes a day after the Government announced a new round of property cooling measures, effective from Sept 30, which include stricter loan eligibility assessment criteria and a 15-month wait for private property owners before they can buy a non-subsided housing board flat.
Market experts attributed the lack of any major reaction to the fact that these measures are relatively limited and mild.
Maybank Securities, in a research note, said that while there might have been some knee-jerk reaction by real estate agencies such as PropNex and Apac Realty, the measures would come as “a huge relief to investors and remove a major overhang, given that the Government did not overreact to the red-hot Singapore residential market”.
Brokers said the market was more concerned with interest rates and inflation, and the impending economic slowdown.
“The bigger issue for the market is the macro outlook,” said a broker at a foreign investment house. “Central bank tightening and concerns over a potential recession are more immediate concerns for investors.”
Market insiders also added that property would remain attractive as an inflation-hedging asset class, and that the stubbornly high inflation would continue to spur interest in property, and thus support prices.
CGS-CIMB retained its positive view of the sector, citing good valuations, with City Developments and UOL as its top picks.
“In our view, City Developments’ land restocking activities, with a potential launch pipeline of some 2,000 units, would extend the visibility of its residential earnings,” analyst Lock Mun Yee wrote. “Value unlocking activities and nascent recovery of the global hospitality industry could catalyse its share price.”
The brokerage also noted that UOL Group had a high recurring income base, supported by rentals, hotel operations and investment holdings. It also has good office exposure through Singapore Land Group, the report noted.
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