S’pore developers suffer worst performance in 2013
After posting the highest gains in 2012, Singapore’s developers recorded the worst performance on the Straits Times Index in 2013 as property cooling measures slowed price gains and pushed down home sales, media reports said.
Ranked the most expensive city to purchase luxury homes in Asia after Hong Kong, property stocks in Singapore are expected to languish further this year.
Chesterton Singapore expects home sales to decline 10 percent while prices may drop for the first time in two years.
With the measures which included stamp duties and other taxes on home buying, the country’s residential developers were rated underweight by UBS AG and Citigroup in the last two months.
Even the two largest Singapore-listed developers, CapitaLand and City Developments, were among the three worst performers on the index.
City Developments fell 25 percent in 2013 compared to a 45 percent gain the year before while CapitaLand dropped 18 percent following a 67 percent increase in 2012.
“Singapore property developers have been out of fashion for some time,” stated Tim Gibson, Head of Asian Property Equities at Henderson Global Investors.
“We would remain cautious of developers with exposure to the residential sector, given that demand for primary units have cooled post the numerous rounds of government measures.”
Notably, the dip in property stocks saw the Straits Times Index dip 0.4 percent, the only decline among developed markets in 2013.
Nonetheless, developers could get a reprieve following the government’s announcement to reduce the number of land sites sold in 1H2014, said SLP International Property Consultants, citing its analysis of URA data.
Nicholas Mak, Executive Director of Research & Consultancy at SLP Singapore, said the decrease “could bring some relief to developers who have unlaunched residential projects or projects with substantial number of unsold units”.
“The reduction in land supply could be to prevent an oversupply in the private housing market.”