Marina Bay Financial Center is jointly developed by Keppel Land, Cheung Kong and Hong Kong Land.
THE HIKE in seller’s stamp duty will erode any price appreciation for property speculators looking to flip within the first one or two years, unlike in 2010 when private home prices rose 17.6% year-on-year, say analysts.

Homes sold from 14 Jan will be subject to seller’s stamp duty of 16%, 12%, 8% and 4%, compared to previously 3%, 2%, 1% and 0%, respectively. Buyers’ stamp duty remains at 3%.

Below is a summary of what some foreign analysts say about the latest round of curbs on property speculation in Singapore:

RBS: Prefer commercial plays like Keppel Land

Analysts: Fera Wirawan and Bryan Lim

Hike in down-payment requirement to deal with cheap capital

Non-individuals must also make a 50% down payment on residential properties. This will curb price growth for en bloc transactions and prime properties as bulk deals by private funds may dwindle.

Individuals with more than one mortgage would also have to fork out 40% down payment (30% previously).  This will hurt initial affordability, especially for the price-sensitive mass-market homebuyers.

We expect residential prices to stabilize from here

We reiterate our expectations of stable property prices this year, as the effect of new rules is mitigated by low mortgage rates and robust economic growth.

We expect volumes to drop, as developers defer launches to assess the impact of the new rules.

Stick to commercial plays

We continue to prefer commercial plays such as Keppel Land (Buy, TP S$5.90), OUE (Buy, TP S$4.65) and UOL (Buy, TP S$5.80).

These stocks have less exposure to the residential sector, which accounts for 10-17% of RNAV.

City Development (Hold, TP S$11.90) would be most impacted, in our view, as it has a 34% RNAV exposure to residential.

We also have a Sell on Capitaland (TP S$3.20), as we believe the stock may remain significantly under-geared this year.


Daiwa: Seller’s stamp duty to hit luxury segment severely

Analyst: David Lum

* Measures will probably be successful in cooling the buoyant property market. With the imposition of these new SSD rates, extended to four years, the latest cooling measures could also kill off any positive sentiment left.

* SSD rates could hit the luxury segment severely

* CapitaMalls Asia, with a sum-of-the-parts (SOTP) six-month target price of S$2.65, and CapitaLand, with an SOTP-based six-month target price of S$4.55, are attractive relative to our SOTP values.



Price Target

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CapitaMalls Asia










City Developments





* We maintain our Outperform ratings for CMA and CapitaLand and believe these measures could underscore their relative defensiveness, especially for CMA, from government policy risk, and possibly lead to short-term relative outperformance.

They were the big underperformers in 2010 even though their NAVs had minor exposures to the Singapore residential segment.

CapitaLand’s exposure to Singapore residential is about 10% based on our estimates. We maintain our Positive view on the Singapore Property Developers Sector given our positive ratings for CMA and CapitaLand.

There is a large upcoming supply due for completion in 2013 of 11.6k private and 18.3k HDB units. Photo by Leong Chan Teik
Morgan Stanley: Expects property stocks to correct 10%, physical prices to correct by 5% to 10%

Analysts: Brian Wee and Wilson Ng

The Singapore government’s last three rounds of property cooling measures caused a slowdown in property sales – but did not lead to a decline in prices.

We believe we are either near or at the peak of residential prices, and the discount to RNAV for developers is likely to rise.

We see downside risks to residential-focused property developers post the latest round of draconian property cooling measures, and we could see -

* Property stocks to correct 10% in the near term.

* Physical prices could correct by 5-10%, supported by an increase in demand from Chinese buyers, strong economic growth, rising wages, and low interest rates.

* Owners are more likely to sell their units given the persistent measures and large upcoming supply due for completion in 2013 of 11.6k private and 18.3k HDB units.

* Buying on dips is not advisable, in our view, and we expect opportunities to arise when the dust settles. Stocks we believe with the largest downside risk include CDL, Wingtai, Allgreen, and CapitaLand.


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