Developers among worst STI performers
SINGAPORE'S developers posted among the worst performances on the benchmark Straits Times Index (STI) this year after recording the biggest gains last year, as property curbs drove home sales lower and slowed price gains.
Property stocks in Singapore may languish further next year, after the Government took measures to cool prices.
Home sales may decline 10 per cent next year, while prices are expected to drop for the first time in two years, according to broker Chesterton Singapore.
The property curbs, which included stamp duties and other taxes on home purchases, led Citigroup and UBS AG to rate the city's residential developers underweight in the past two months.
CapitaLand and City Developments, Singapore's two biggest listed developers, were among the three worst performers on the index after being in the top 10 last year.
City Developments fell 25 per cent this year, making it the second-worst performer on the STI and reversing a 45 per cent gain last year.
CapitaLand declined 18 per cent, the third worst on the measure this year after a 67 per cent advance last year. The worst performer, Jardine Cycle & Carriage, dived 27 per cent. Four of the 10 poorest performers on the benchmark were property companies.
The Singapore property index, which tracks 50 developers in the city, slid 10 per cent this year, after surging 48 per cent last year.
"Singapore property developers have been out of fashion for some time," said Mr 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 has cooled after the numerous rounds of government measures."
Mr Wilson Liew, an analyst at Maybank Kim Eng Securities, wrote in a Dec 17 note that higher borrowing costs, falling public-housing resale prices, slower population growth and a record number of apartment completions suggest that residential demand will wane.
But the developers aren't just reliant on Singapore. CapitaLand's holdings here make up 36 per cent of its assets, lower than the 39 per cent for properties in China, it said on Nov 12.
For Keppel Land, Singapore contributed to 41 per cent of sales in the third quarter.
Developers, including CapitaLand and City Developments, are expected to report profit increases this year, according to estimates from Maybank.
The decline in stock prices also made some developers attractive relative to the Singapore market. CapitaLand and Keppel Land trade at 0.8 times their book value, compared with a multiple of 1.4 for the benchmark stock index. City Developments trades at 1.2 times.