Residential market can 'seek shelter' with CapitaLand amidst property cooling measures: OCBC

One of the main revisions is the uplift in Additional Buyer's Stamp Duty rates.

Singapore's Ministry of National Development (MND) announced a new round of property cooling measures. One of the main revisions is the uplift in Additional Buyer's Stamp Duty (ABSD) rates with effect from 16 December, which would increase by 5 to 15 percentage points, except for Singapore citizens and Singapore permanent residents buying their first residential property (unchanged ABSD rate of 0% and 5%, respectively).

OCBC Investment Research believed this reflects the government's intention to continue to support first time home buyers and owner-occupiers. It also expected home demand to decline in the near term, with transaction volumes likely to be impacted more heavily than prices. It added it is plausible for private new home sales volume to fall back under 10,000 units in 2022 due to the cooling measures and dampened sentiment.

OCBC suggested investors can seek shelter in CapitaLand Investment Limited, given that it would be relatively unscathed from this round of cooling measures following its recent corporate restructuring where its property development arm has been privatised. It also believed any overreaction in UOL Group's share price would provide a good entry point, given its cheap valuations, strong management team and solid balance sheet.

OCBC said it expects a negative knee jerk reaction on the share prices of Singapore-listed developers following this latest round of cooling measures. However, based on the initial share price reaction, this appears milder compared to July 2018. There were already market expectations of potential property cooling measures, although the timing was earlier than expected. Developers were carrying lesser unsold inventory compared to 2018, while many of them have further diversified overseas following the onerous measures back in 2018. Lastly, valuations of Singapore developers were cheaper today as compared to July 2018.