SINGAPORE (Sept 29): It seems like only yesterday that property developers were complaining about punitive property cooling measures and struggling to get unsold units off their books.

But according to some analysts, the local property market has actually been steadily recovering for more than a year.

“In the eyes of agents and marketing consultants, prices in the high-end segment had already started to recover in mid-2016. For the mid-tier and mass-market segments, they started to turn around in late-2016,” says Alan Cheong, senior director and head of research at property consulting firm Savills.

Now, with unsold units off their books, many property developers are launching new projects and hunting for more development sites. That is spurring a surge in collective sales.

What does all this mean for the property developers? Will the emerging boom in demand for residential property last? What is driving demand in the first place?

One big driver for the local property market is accelerating economic growth and stabilising unemployment.

In a previous issue of The Edge Singapore, Manu Bhaskaran, head of economic research at Centennial Group, said in his fortnightly column that most major economies in the world are in the midstof a phase of synchronised growth that seems likely to continue. That is now driving a big pickup in Singapore’s trade-dependent economy.

See: Huge pickup for Singapore economy expected as global growth revives

At a more micro level, the local property market is beginning to attract foreign buyers again after some other countries have imposed measures to deter speculation that are much tougher than Singapore’s own cooling measures.

Notably, in November last year, Hong Kong doubled its stamp duties on overseas property buyers to 30%, which is twice Singapore’s additional buyer’s stamp duty (ABSD) of 15%. In January last year, Taipei announced a punitive divestment gains tax of up to 45%. In the meantime, Sydney has raised its stamp duty to 8% of the purchase price of a property, while Vancouver has hiked its stamp duty to 15%.

Already, property purchases by foreigners are up 20% y-o-y for the first nine months of this year, accounting for 22% of units purchased during the period.

The recovery in the property market has not gone unnoticed by investors.

Property stocks have been among the best performers in the market this year, especially the domestically focused ones such as City Developments and Wing Tai, which are up 37% versus a 12% rise in the Straits Times Index.

Real estate investment trusts focused on offices, such as CapitaLand Commercial Trust and Keppel REIT, have also done well, rising 15.9% and 15.7% respectively this year, on growing confidence of an acceleration in economic growth.

Yet, most property stocks are still trading at big discounts to their book values and revalued net asset values (RNAVs). And, as they now achieve stronger sales on the back of improving sentiment, they should begin generating stronger earnings, which should lift their NAVs as well as their stock prices.

Which are the property stocks you should consider?

Find out in our cover story, “Betting on property stock”, in The Edge Singapore (week of Oct 2), available at newsstands now.