Shares of Singapore-listed property players are poised to achieve their highest annual gain in five years, with experts believing that the good times would continue, reported Bloomberg.
So far this year, developers and property trusts, including UOL Group and City Developments Limited, account for five out of 10 top-performing shares on Straits Times Index.
In fact, the index tracking 42 Singapore property stocks increased by 16 percent, leading to its biggest annual gain since 2012. Comparatively, the city-state’s benchmark gauge only rose by 12 percent year-to-date.
This comes after the government rolled back several property cooling measures in March. This resulted in home sales doubling on an annual basis during the same month and it soared to its highest level in nearly four years, based on data from the Urban Redevelopment Authority (URA).
“We’re in a recovery phase at this point. There are a number of macro prudential measures that are still weighing on the real estate market but we are definitely up from the bottom we saw early last year,” noted Morgan Stanley equity strategist Sean Gardiner.
According to Desmond Loh from JPMorgan Asset Management, the second top-performing fund here this year, the housing market is witnessing a marked improvement in sentiment.
This would benefit property players that have starting acquiring land for new developments, he shared, adding that vacancy levels are forecasted to drop in the next few years.
Andrew Gillan, head of equities for Asia excluding Japan at Janus Henderson Group, shared that the recovery bodes well for earnings of developers, particularly those that have amassed landbank at “reasonable” prices.
Notably, developers have recently started to accumulate land for their developments. For instance, a Chinese consortium bought a residential site under the government land sales programme last month for a record price of S$1 billion. Other developers turned to en-bloc sales to beef up their land, spending a total of S$1.5 billion on four of such deals so far this year.
However, the rebound in residential sales hasn’t been consistent. Official statistics revealed last week that transactions declined by 34 percent in May as fewer new projects were launched. Moreover, a significant rise in home sales may force the authorities to impose more cooling measures or slow the pace of easing.
The risk is “if volume really start to pick up quite strongly, then we will see more measures from the Monetary Authority of Singapore. That’s something I can’t rule out, it’s certainly a possibility,” added Nomura Southeast Asian equity strategist Mixo Das.
This article was edited by Denise Djong.