(SINGAPORE) Property stocks slid yesterday after the government announced new measures to cool Singapore’s residential property market, even though analysts said the impact on developers is likely to be minimal.

Allgreen Properties was the biggest loser among property plays listed on the main board. The Singapore-based developer, controlled by Malaysian billionaire Robert Kuok, plunged 7 per cent to $1.06.

City Developments, Singapore’s second-largest developer by market value, sank 4.2 per cent to $11.46. UOL Group fell 1.3 per cent to $3.93 and CapitaLand, South-east Asia’s biggest developer, dipped 0.5 per cent to $3.98.

Analysts said the government’s measures are largely aimed at speculators, and that property stocks with high residential exposure are likely to be hit – although the impact may be minimal, with mid-to- high-end property developers largely unaffected. Most have maintained their ratings for the sector.

Daiwa Research put it this way: ‘We believe these cooling measures appear light. All in, this package looks to us like a mild warning from the government to be careful.’

Daiwa kept its ‘neutral’ call on property developers here.

A saving grace for many developers is that they have sold down the bulk of their inventory and, as a result, are unlikely to be adversely affected by the policies, said CIMB Research. It reiterated its ‘under-weight’ call on the property sector.

The major impact will be in the public housing and the private mass market segments, said UOB Kay Hian. ‘We see better value in the high-end segment that is less susceptible to government measures.’

It said its top picks are A-Reit, K-Reit and CDL Hospitality Trust, which have exposure to the industrial, office and hospitality space respectively and are not the targets of the government curbs.

Mid-to-high-end properties are unlikely to be affected, though their transaction volumes could be soft in the near term, said Credit Suisse.

Although the government’s moves are aimed primarily at speculators in mass market properties, such as HDB units, developers are likely to suffer a knee-jerk reaction, it said. In particular, residential property proxies like City Dev, Allgreen and Wing Tai Holdings are likely to be affected.

And while developers are expected to weather the tightening measures fairly well, downside risks lurk.

Daiwa said the government could implement tougher measures if the market remains buoyant, with price increases of over 5 per cent per quarter.

The record pipeline of residential units being planned and constructed, and global economic uncertainty could drag down property prices and rents, said Barclays Capital.

The ‘measures continue to signal that the authorities are adopting an incremental approach to deflating house price expectations’, it said.

‘Coupled with the record pipeline of residential units that are planned or under construction, as well as rising global economic uncertainties, we maintain that the risks for property prices and rents over the next four years are to the downside.’

Source: Business Times, 31 Aug 2010