TODAY Online : Property stocks take a beating

Property stocks take a beating

05:55 AM Feb 23, 2010

by Ephraim Seow ephraimseow@mediacorp.com.sg

SINGAPORE - Property stocks were battered and ended the trading day in a sea of red ink on the Singapore Exchange yesterday.

Dealers said that investors were unloading these counters on dented sentiment amid the Government's latest measures to cool an overheating property sector.

Shares of property giants such as City Developments fell 4.8 per cent to $10.30, while CapitaLand shed 3.6 per cent to close at $3.76. Wing Tai and Keppel Land were also not spared as their shares dropped 5.1 per cent to $1.68, and 2.1 per cent to $3.30, respectively.

Overall, the FTSE ST Real Estate Index closed 7.3 points or 1.1 per cent lower at 629.4 points.

Last Friday, the Government had imposed a Seller's Stamp Duty on residential property and land sold within one year and capped the loan-to-value ratio to discourage short-term speculative activity in the market.

Analysts believe more cooling measures are ahead if property prices and sales volumes do not revert to "sustainable levels".

DBS Vickers property analyst Adrian Chua said this presents a "Catch-22" situation.

"If the measures have minimal impact, it heightens the policy risk and potential impact from future policies; if the measures work better than expected, valuations would decline," he said.

Analysts also reckon that sentiment on property stocks may continue to be weak until signs emerge that the sale of residential properties has reached sustainable levels.

Cushman and Wakefield's managing director Donald Han said that a sustainable level for private property sales in the market should be between 800 and 900 units a month, much lower than the 1,476 units sold in January.

Yet, some upbeat analysts said investors will probably continue to see investing in property as a good long term solution, given the higher risks in the stock markets now.

Meanwhile, Mr Han advises investors not to engage in panic selling, but to start accumulating property stocks because these companies are fundamentally sound and have announced good profits for the last quarter.

CapitaLand and UOL remain DBS Vickers' top picks. It also favours those companies with less unsold property in their land bank like Wheelock Properties and Ho Bee.

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