S'pore property stocks plunge on new cooling measures

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http://www.businesstimes.com.sg/brea...sures-20130114

Published January 14, 2013

S'pore property stocks plunge on new cooling measures


SINGAPORE - Shares of Singapore property developers dropped on Monday after the city-state's government introduced sweeping measures to cool the housing market, which has seen strong demand despite a weak economy and previous efforts to curb prices.

Shares of CapitaLand Ltd fell 5.9 per cent, City Developments Ltd sank 7.3 per cent and Keppel Land Ltd dropped 7.5 per cent. The Straits Times Index was 0.8 per cent lower.

Foreigners and companies buying residential property will now be subject to a stamp duty of 15 per cent of the purchase price, up from the previous 10 per cent.

Singapore also introduced, for the first time, a seller's stamp duty of 5 to 15 per cent on those who buy and then sell industrial properties such as warehouses and factories within three years.

"We think the reaction to this set of comprehensive measures will be the most significant thus far, relative to the earlier six rounds," Barclays said in a report.

"Coupled with the large supply pipeline of public and private housing over the next few years, we think property prices will very likely stabilise, if not fall, this year." OCBC Investment Research cautioned against buying property stocks on weakness as the latest set of cooling measures would likely have a deep and sustained impact on demand fundamentals.

"These curbs point to a strong political will to soften property prices and possibly more aggressive measures ahead," it added. - REUTERS

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http://www.businesstimes.com.sg/brea...ction-20130114

Published January 14, 2013

Update: S'pore property stocks slump on government action


SINGAPORE - Shares in Singapore property developers took a beating after the government launched sweeping measures to cool the housing market, where strong demand has persisted despite a weak economy and previous efforts to slow rising prices.

The property sector, last year's best performer on the Singapore Exchange with a 48 per cent jump, fell as much as 2.7 per cent, its biggest drop since May 2012.

Shares in major developers CapitaLand Ltd lost more than 4 per cent, while Keppel Land Ltd and City Developments Ltd both shed more than 6 per cent, dragging the main index 0.5 per cent lower.

"We think the reaction to this set of comprehensive measures will be the most significant thus far, relative to the earlier six rounds," Barclays Bank said in a report.

"Coupled with the large supply pipeline of public and private housing over the next few years, we think property prices will very likely stabilise, if not fall, this year." The government's action, its seventh attempt to temper the market since late 2009, comes as the ruling party also tries to curb the influx of foreigners. Locals have complained of overcrowding, as well as stiffer competition for jobs and housing.

Foreigners and corporates who buy residential property in Singapore will be subject to an additional buyer's stamp duty (ABSD) of 15 per cent of the purchase price, up from the previous 10 per cent.

The city-state also introduced, for the first time, a seller's stamp duty of 5-15 per cent on those who buy, then within three years sell, industrial properties such as warehouses and factories.

The measures introduced late on Friday come as interest rates, which are near record lows in Singapore, have fuelled a nearly 60 per cent rise in private residential prices since they hit a trough in the second quarter of 2009 after the global financial crisis.

Homebuyers can pay as little as 1 per cent per annum on their mortgage loans.

Resale prices of government-built HDB apartments, which house about 80 percent of Singaporeans, have also surged.

Tighter loan measures affected bank stocks across the board on Monday, with DBS Group Holdings Ltd, Oversea-Chinese Banking Corp, and United Overseas Bank down between 1.2 per cent and 1.7 per cent.

"The government is serious about addressing affordability for new Singaporean homebuyers," said Kristy Fong, an investment manager at Aberdeen Asset Management PLC. "Therefore the intent is for the property market to cool, but not crash given that they are clear about these measures being temporary depending on future market conditions." - REUTERS

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http://www.straitstimes.com/archive/...sures-20130115

Property stocks fall sharply on new cooling measures

Bank counters decline too on fears that curbs will hit property loans

Published on Jan 15, 2013

By Jonathan Kwok


PROPERTY stocks fell sharply yesterday, as investors bailed out after tough new cooling measures were announced last Friday.

The pain was felt from the get-go, although many counters managed to recover some value as the session wore on.

"In the morning, it was pretty weak. A lot of the counters like CapitaLand and Keppel Land dropped more than expected," said remisier Desmond Leong. "But after that, most of these counters managed to recover partially."

The tumble claimed some of the country's highest-profile builders, with companies taking sizeable hits.

Wing Tai Holdings lost 18 cents or 8.9 per cent to $1.84, City Developments declined 95 cents or 7.5 per cent to $11.65, and Keppel Land dropped 31 cents or 7.2 per cent to $3.97.

Sing Holdings was down three cents or 7 per cent to 40 cents, while South-east Asia's largest developer CapitaLand fell 16 cents or 4.1 per cent to $3.73.

The FTSE ST Real Estate Holding and Development Index - which tracks the share prices of developers but leaves out smaller mainboard companies and all Catalist companies - fell 2.55 per cent, its largest loss in percentage terms since June last year.

The index was supported by industrial and retail mall developers and those focused on overseas developments. Without them, the plunge would have been greater.

Banks also fell on fears that the new curbs would have an impact on their property loans business.

United Overseas Bank declined 44 cents or 2.3 per cent to $18.78, DBS Group Holdings fell 29 cents or 2 per cent to $14.41 and OCBC Bank closed at $9.62, down 13 cents or 1.3 per cent.

The selldowns in these key sectors spread to the wider market and affected even stocks not linked to the property sector, with traders taking profit on some of their money-making positions.

"It was expected there would be a knee-jerk reaction (to the curbs)," said Mr Leong. "Maybe people took this cue to take profit, so the overall market was down."

The benchmark Straits Times Index shed 9.91 points, or 0.31 per cent, to 3,206.59 points, although it was down almost 1 per cent in early trade.

Hong Kong's Hang Seng Index rose 0.64 per cent and Shanghai's market advanced 3.06 per cent.

Analysts said the knee-jerk share price drops were less of a worry. Rather, housing sales volumes could fall in the wake of the latest measures and have a direct impact on developers' profit levels.

Barclays Research called last Friday's move the "most comprehensive set of measures yet" that "should be the most effective in bringing down volumes and stabilising prices".

Although Barclays expects mass-market prices to be stable, the measures "should be negative on developers on margin concerns and slower volumes".

OCBC Investment Research said developer stocks could fall between 3 per cent and 10 per cent on knee-jerk reactions to the measures, but cautioned investors against "buying on weakness" - or snapping up shares when their prices fall.

"We see the latest set of cooling measures having a deeper and more sustained impact on demand fundamentals," said OCBC.

It added that the latest measures "point to a strong political will to soften property prices", and it expects "sustained and aggressive curbs until prices reach levels deemed acceptable".

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