Singapore’s condo builders pressured to repay $19b combined debt soon

Will they meet the deadline?

Singapore’s listed developers and real-estate investment trusts face their heaviest burden of near-term maturities on record just as home prices drop.

According to a report by Bloomberg, the 80 property companies on Singapore’s stock exchange reported a combined S$23.5 billion ($18.5 billion) of borrowings that have to be repaid within a year in their latest filings, Bloomberg-compiled data show. The looming debt wall comes as the vacancy rate for condominiums soared to the highest since 2006, pushing prices to the lowest in almost two years, according to data from the Urban Redevelopment Authority.

Bloomberg adds that Savills Plc predicts refinancing for homebuilders and REITs will be more challenging as Singapore’s economy slows, with expansion cooling to 2.4 percent in the second quarter, from 4.8 percent in the previous three months. Population growth on the island is at a 10-year low and Standard & Poor’s expects home prices have further to fall.

“We’re at that point in the cycle when every quarter you’re seeing selling prices come down a little bit and secondary market transactions aren’t very active,” Kah Ling Chan, a property analyst at S&P in Singapore said. “I suspect we haven’t seen the bottom yet.”

Developers of residential homes are suffering not so much from lower selling prices than “collapsed” sales volumes, said Alan Cheong, a senior director of real-estate research at Savills in Singapore. Secondary home sales plunged to the lowest since 2003 in the first quarter, according to URA data, and as business slows, builders with less pre-sales money to finish projects have to rely on loans, boosting short-term borrowings, he said by phone Oct. 2.

View the full report here.