SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
30 October 2012
Co. Reg No: 198700034EMICA (P) : 099/03/2012
A Theory of Relativity
HK measures may lift Singapore’s high-end demand.
W.e.f. 27 Oct,the Hong Kong government will impose a Buyer’s Stamp Duty of 15%for all residential property purchased by non-HK residents. The Seller’sStamp Duty (SSD) is also extended to three years from two. Thiscomes nearly a year after Singapore introduced its Additional Buyer’sStamp Duty of 10% for foreigners, and two years after Singaporeextended its own SSD to four years, but the combined effect is moreonerous than what the Singapore government has implemented.
Singapore’s relatively more attractive.
We think that a sufficient timehas passed for the Singapore measures to sink in with investors. HK’smeasures, largely targeted at PRC buyers, may divert investment flowsinto Singapore’s high-end segment, where underlying prices remainrelatively cheaper compared with projects of similar positioning in HK.In addition, there is a wide selection of high-quality freehold projects forinvestors to choose from, which is unavailable in HK. At its peak, PRCbuyers accounted for 11% of CCR purchases in 3Q11. We see a goodchance of the proportion of PRC buyers rising back to around 10% from5% in 3Q12, following the HK government’s latest move.
Rising heat in 3Q12.
According to the official statistics released by theURA on Monday, private residential property prices rose by 0.6% in3Q12, up from the 0.4% increase in 2Q12. Prices of non-landed privateproperties grew by 1% in the Outside Central Region (OCR), 0.8% inthe Rest of Central Region (RCR) and 0.1% in the Core Central Region(CCR). However, the figures only reflect conditions before the latestcooling measures implemented on 5 Oct capping home loan tenures.
Demand for shoebox units appears to be moderating.
Following theURA’s change in planning requirements to restrict the number ofshoebox units (<50 sqm) within each development in the OCR, demandfor such units appear to have cooled in 3Q12, as they accounted for16% of the new sales in the quarter vis-à-vis 19% in 2Q12. As acorollary, units priced at below SGD750k each accounted for 18% ofnew sales in the quarter, down from 27% in 2Q12.
Signs of life in the high-end segment.
New home sales in the CCRrose to a seven-quarter high, as developers sold 703 new homes in theregion during 3Q12, comprising 647 uncompleted units and 56completed ones. While uncompleted units posted a marginal 0.5%decline in prices, completed ones enjoyed a 0.7% gain for overall pricesin the CCR to mark a 0.1% increase in 3Q12.
High-end to be the relative outperformer.
While we do not rule outfurther cooling measures from the Singapore government, we think thatany new measures will be more specifically targeted at curbing priceappreciation in the mass market segment, where affordability is themain concern. We continue to favour developers with a more sizeableexposure in the high-end segment, namely Wing Tai (WINGT SP; BUY;TP SGD2.10) and Ho Bee (HOBEE SP; BUY; TP SGD1.79).
Wilson LIEWwilsonliew@maybank-ke.com.sg(65) 6432 1454