ST : Property stocks hit

Aug 31, 2010

n-day rally reactions

Property stocks hit

By Harsha Jethnani

DEVELOPERS took a hit on the share market yesterday following the announcement of new measures aimed at cooling the real estate boom.

It was far from a bloodbath - shares dipped around 4 to 5 per cent although Allgreen Properties dived 7 per cent - but experts are uncertain where the market is headed.

Analysts expect downward pressure on shares to continue in the short term.

Although similar cooling measures have been introduced over recent months, yesterday's steps are more broad-based and possibly of greater magnitude, said CIMB analyst Donald Chua.

Mr Brandon Lee, an analyst at DMG & Partners, added that much will depend on how the real estate market dynamics play out and how sales fare and markets perform.

Companies like CapitaLand and Keppel Land are expected to be less susceptible to the effects of the measures given their diversified business models and geographic exposure, Kim Eng analyst Wilson Liew noted in a report yesterday.

Real estate investment trusts or Reits with exposure to retail and commercial assets are also expected to fare better.

Market observers note that the new steps can heighten uncertainty about the market's stability.

Although the measures come across as a 'mild warning from the Government', a report from Daiwa Capital Markets stated, if price increases persist, things could be different.

If prices continue to rise by over 5 per cent per quarter, Daiwa expects more 'severe' measures could come our way.

On the shares front, Allgreen closed at $1.06 while City Developments, Singapore's biggest property developer after CapitaLand, slumped 50 cents or 4.18 per cent to $11.46. Wing Tai was down 4.6 per cent to $1.65, while the Ho Bee Group was off 3.77 per cent to $1.53.

Losses were smaller elsewhere. CapitaLand shares dropped just half a per cent to $3.98, Keppel Land kept losses to 2 per cent at $3.85 and UOL lost only 1.26 per cent to $3.93. Luxury property developer SC Global fell 1.25 per cent to $1.58.