SINGAPORE’S developers posted the worst performance on the benchmark Straits Times Index this year after recording the biggest gains in 2012 as property curbs drove home sales lower and slowed price gains.
Property stocks in Singapore, ranked the most-expensive city to buy a luxury home in Asia after Hong Kong, may further languish next year after the government took measures to cool prices.
Home sales may decline 10 per cent in 2014 while prices are expected to drop for the first time in two years, according to broker Chesterton Singapore Pte.
The property curbs, which included stamp duties and other taxes on home purchases, led Citigroup Inc and UBS AG to rate the city’s residential developers underweight in the past two months. CapitaLand Ltd and City Developments Ltd, the nation’s two biggest listed developers, were among the three worst performers on the index after being in the top 10 last year.
“Singapore property developers have been out of fashion for some time,” said Tim Gibson, head of Asian property equities at Henderson Global Investors Ltd, which manages about US$117 billion (RM384.93 billion) globally.
“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.”
Developers are beginning to cut prices in existing and new projects and take lower profit margins, City Developments said on November 12.
Higher borrowing costs, falling public housing resale prices, slower population growth and a record number of apartment completions suggest that residential demand will wane, Maybank Kim Eng Securities analyst Wilson Liew wrote in a December 17 note.
City Developments fell 25 per cent this year, making it the second-worst performer on the Straits Times Index and reversing a 45 per cent gain in 2012. CapitaLand fell 18 per cent, the third-worst performer after a 67 per cent advance in 2012.
