'Long winter' ending for S'pore property market, say analysts

Singapore home prices have risen for two consecutive quarters, and are expected to increase by about 5.5 per cent this year.
Singapore home prices have risen for two consecutive quarters, and are expected to increase by about 5.5 per cent this year.PHOTO: ST FILE

The worst may be over for Singapore's property slump.

After a four-year slide in private residential prices, analysts are now calling an end to the property downturn. Singapore home prices have risen for two consecutive quarters, and are expected to increase by about 5.5 per cent this year, according to a survey by Bloomberg.

There is also the earnings season to look forward to next month as the upbeat outlook for the real estate market may augur well for Singapore developers.

On Feb 28, City Developments is expected to post an annual profit of $563.4 million, according to Bloomberg data. CapitaLand and UOL Group are both also expected to publish earnings statements next month, with analyst estimates pointing to a 9.4 per cent increase in UOL's full-year net income.

"It has been too long a winter for the Singapore residential market," said Ms Christine Li, director of research at Cushman & Wakefield, in an e-mail. "With Singapore's economic outlook looking rosier, investor confidence is on the road to recovery."

The city-state's real estate sector looks to be emerging from its rut amid a jump in home sales and aggressive bids for land by developers. An index tracking private residential prices rose 1 per cent last year, against a 3.1 per cent decline in 2016, data from the Urban Redevelopment Authority shows.

A poll of 11 analysts conducted between Jan 11 and 22 shows a median estimate of a 5.5 per cent rise in home prices this year.

While the turnaround has been accompanied by a surge in collective sale deals - which has fuelled concern of a potential oversupply of homes - it is "far too early to be worried" as the redeveloped properties will not resurface until 2020 at the earliest, Mr Derrick Heng, an analyst at Maybank Kim Eng Securities, wrote in a note.

Singapore's property stocks have benefited from the recovery in investor sentiment, with City Developments and UOL Group among the top five performing counters on the benchmark Straits Times Index last year.

Both companies rose by about 50 per cent each.

"Despite the strong run last year, valuations are not yet stretched, particularly in comparison with past periods of a property upcycle," said Ms Low Xin Yan, an investment analyst at Janus Henderson Investors. "We expect the positive performance for property stocks to continue," she added.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 24, 2018, with the headline ''Long winter' ending for S'pore property market, say analysts'. Print Edition | Subscribe