Here's why Singapore lagged Hong Kong in real estate performance

Singapore's 16% index grabbed second best only.

According to Nomura, much has changed over the past three months. At the start of June, concerns about policy and macro risks were so high that investors did not care how cheap valuations were. Three months later, concerns about policy risks appears to have turned into complacency, with investors now dismissing the efficacy of recent policy tweaks.

Here's more from Nomura:

Over this period, Asia real estate stocks have done well, rising 14% since May 31 and outperforming the MSCI AC Asia Index’s 4% gain over the same period. In Asia ex-Japan, the MSCI AC AxJ Real Estate index rose 15%, outperforming the MSCI AxJ Index’s 5% gain and nearly recovering to Q1’s peak.

If we were to use the respective countries’ real estate indices as guides, HK rose the most at 17%. This was followed by Singapore at 16% and Japan at 14%. At the other end of the spectrum, India fell by 2% while Indonesia was up only 3%.

If we were to look at the performance of the respective constituents of the MSCI AC Asia Real Estate Index, as HK, Singapore and Japan collectively make up more than 80% of the weighting, their strong performance over the past three months more than offsets the weakness seen in China, India and Malaysia.

On the policy front, while China, India and Japan remain accommodative, they have started to tighten in HK and in SG. The URA recently issued a new circular providing guidelines for “shoe-box”development in the OCR. The measure is aimed to discourage predominately shoe-box development in suburban areas.