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08-12-11, 16:12
http://www.businesstimes.com.sg/sub/news/story/0,4574,468818,00.html?
Published December 8, 2011
Luxury developers may be hit most
By MINDY TAN AND MICHELLE TAN
(SINGAPORE) Developers of luxury property may be the worst hit by the latest government measures to cool prices, analysts say, although the knock-down impact would likely be felt throughout the market.
The government yesterday announced an additional buyer's stamp duty (ABSD) over and above the current stamp duty, effective from today.
Among other things, an additional buyer's stamp duty of 10 per cent will be imposed on foreigners and corporate entities that buy any residential property.
'Share prices of developers such as Wing Tai, SC Global and Ho Bee, all with substantial exposure to the high-end segment, could see near-term corrections. The more diversified players like CapitaLand and Keppel Land are unlikely to be as affected, share price-wise,' said Kim Eng analyst Wilson Liew.
City Developments, another developer with significant exposure to the local market, will also be hit, analysts say.
The latest measures affect a group that has come to form a significant portion of property buyers here. Said Terence Wong from DMG Research: 'Foreign buyers have increased on the mass market front over the past few quarters, and this could have been a trigger behind this latest move.'
Research house IIFL Securities Pte Ltd noted that foreigners and permanent residents comprised around 20 per cent and 15 per cent respectively of all non-landed (excluding executive condominiums) transactions in the third quarter of 2011, while corporate entities constituted another 2 per cent, making them a significant demand source for domestic properties.
'The ABSD will upset foreign buyers as they will feel discriminated against but the calibration of the ABSD clearly sends out the message of 'Singaporeans first',' Credo Real Estate executive director Ong Teck Hui said.
In particular, the ABSD is likely to have a strong impact on the prime and mid-prime markets as demand could potentially be reduced by 25 per cent. A more moderate impact on the suburban mass market is expected, added Mr Ong.
Png Poh Soon, head of research at Knight Frank Singapore, postulated a 'knee-jerk impact of the ABSD on home buyers' sentiments'.
But he qualified: 'Genuine home buyers are not likely to be affected, although they may defer their buying decisions in the next few months on hopes of cooling prices.'
According to Jones Lang LaSalle's head of research Chua Yang Liang, an impact should be felt almost immediately. 'In most cases, within the first 30 days there will be some impact. The subsequent 30 days will show whether the market is deep enough to sustain the additional stamp duty.'
But some felt the most expensive segment may not be affected much. A growing number of high-profile luxury property transactions in Singapore involve very rich foreigners - a price insensitive crowd.
Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group (DWG), noted that while the policy would generally affect developments targeting foreign buyers, it might not have that large an impact on those purchasing super luxury developments.
The new residential market measures may drive demand to other segments. 'After this round of measures, the office and industrial markets will turn out to be non-sustainable as investors will be driven to those areas,' noted Ku Swee Yong, chief executive of International Property Advisor.
'The measures have economic and political implications and it seems that the government is taking efforts to mitigate the impact of foreign buying by making it more expensive for foreigners, though its ultimate efficacy remains a big question mark,' said Song Seng Wun, economist at CIMB.
Published December 8, 2011
Luxury developers may be hit most
By MINDY TAN AND MICHELLE TAN
(SINGAPORE) Developers of luxury property may be the worst hit by the latest government measures to cool prices, analysts say, although the knock-down impact would likely be felt throughout the market.
The government yesterday announced an additional buyer's stamp duty (ABSD) over and above the current stamp duty, effective from today.
Among other things, an additional buyer's stamp duty of 10 per cent will be imposed on foreigners and corporate entities that buy any residential property.
'Share prices of developers such as Wing Tai, SC Global and Ho Bee, all with substantial exposure to the high-end segment, could see near-term corrections. The more diversified players like CapitaLand and Keppel Land are unlikely to be as affected, share price-wise,' said Kim Eng analyst Wilson Liew.
City Developments, another developer with significant exposure to the local market, will also be hit, analysts say.
The latest measures affect a group that has come to form a significant portion of property buyers here. Said Terence Wong from DMG Research: 'Foreign buyers have increased on the mass market front over the past few quarters, and this could have been a trigger behind this latest move.'
Research house IIFL Securities Pte Ltd noted that foreigners and permanent residents comprised around 20 per cent and 15 per cent respectively of all non-landed (excluding executive condominiums) transactions in the third quarter of 2011, while corporate entities constituted another 2 per cent, making them a significant demand source for domestic properties.
'The ABSD will upset foreign buyers as they will feel discriminated against but the calibration of the ABSD clearly sends out the message of 'Singaporeans first',' Credo Real Estate executive director Ong Teck Hui said.
In particular, the ABSD is likely to have a strong impact on the prime and mid-prime markets as demand could potentially be reduced by 25 per cent. A more moderate impact on the suburban mass market is expected, added Mr Ong.
Png Poh Soon, head of research at Knight Frank Singapore, postulated a 'knee-jerk impact of the ABSD on home buyers' sentiments'.
But he qualified: 'Genuine home buyers are not likely to be affected, although they may defer their buying decisions in the next few months on hopes of cooling prices.'
According to Jones Lang LaSalle's head of research Chua Yang Liang, an impact should be felt almost immediately. 'In most cases, within the first 30 days there will be some impact. The subsequent 30 days will show whether the market is deep enough to sustain the additional stamp duty.'
But some felt the most expensive segment may not be affected much. A growing number of high-profile luxury property transactions in Singapore involve very rich foreigners - a price insensitive crowd.
Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group (DWG), noted that while the policy would generally affect developments targeting foreign buyers, it might not have that large an impact on those purchasing super luxury developments.
The new residential market measures may drive demand to other segments. 'After this round of measures, the office and industrial markets will turn out to be non-sustainable as investors will be driven to those areas,' noted Ku Swee Yong, chief executive of International Property Advisor.
'The measures have economic and political implications and it seems that the government is taking efforts to mitigate the impact of foreign buying by making it more expensive for foreigners, though its ultimate efficacy remains a big question mark,' said Song Seng Wun, economist at CIMB.