CGS-CIMB Research is currently reviewing its “overweight” recommendation on the property sector, following new cooling measures introduced by the government.

Although developers are trading at inexpensive valuations at a 45% discount to RNAV, the near-term slower market sentiment is expected to impact share price performance, says analyst Lock Mun Yee.

UOL has two planned launches in 2023 — namely Pinetree Hill and Watten Estate en bloc redevelopment, totalling 700 units. CDL, on the other hand, still has Newport Residences and The Myst with a total of 654 units, in addition to the recent launch of Tembusu Grand.

See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/news/property/jv-comprising-guocoland-hong-leong-and-csc-land-wins-tender-lentor-central-land-parcel?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>JV comprising GuocoLand, Hong Leong and CSC Land wins tender of Lentor Central land parcel at bid price of $435.2 mil</a>

With effect from Apr 27, Singapore citizens purchasing their second property will have to pay higher Additional Buyer’s Stamp Duty (ABSD) of 20% while the following properties they acquired will be subjected to 30% ABSD.

Singapore permanent residents will see the rate increase to 30% and 35% respectively for second and subsequent properties. Lastly, foreigners and entities or trustees will see a doubling of ABSD rates to 60% and 65%.

The new measures are expected to impact about 10% of all residential transactions and are meant to pre-emptively manage investment demand. Lock notes that in 1Q2023, private home prices rose 3.2% q-o-q.

See also: <a class='gtm_see_also_2_inread' style='text-decoration: underline;' href='/news/property/hiap-hoe-debuts-singapores-first-aloft-hotel-balestier?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>Hiap Hoe debuts Singapore’s first Aloft Hotel in Balestier</a>

Lock says CGS-CIMB is negative on the increases in duties as it comes at a time when mortgage rates have also risen significantly. “We anticipate the new measures would likely cause a knee-jerk slowdown in transaction volumes in the immediate term, as buyers, particularly foreigners, assess the impact of a doubling of ABSD on their budgets,” she adds.

As such, CGS-CIMB has lowered its 2023 primary sales volume forecast to 5,000-5,500 from 7,000-8,000 previously, aside from lowering its home price growth forecast to -2%-2% from 0%-3% previously.

“While there is no change in ABSD for developers, we believe that given the anticipated slower market and dampened sentiment, developers would likely delay and time their launches to the market, thus reducing their development income visibility in the medium term,” adds Lock.

CDL, UOL could be most adversely affected by new property cooling measures among developers: CGS-CIMB

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CDL, UOL could be most adversely affected by new property cooling measures among developers: CGS-CIMB

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