UBS: Singapore property market ‘at cusp of recovery’

The skyline in Singapore’s central business district.The skyline in Singapore’s central business district.

Singapore’s residential property market is in the early stages of recovery after a four-year decline, with banks and property developers set to benefit, UBS said in a note last week.

Property prices fell 12 percent between the third quarter of 2013 and the second quarter of 2017 amid cooling measures from the government, coupled with high new-home supply, it noted, in a note titled, “Singapore property: At the cusp of a recovery.”

“These factors are set to reverse, in our view. The tightening cycle has come to an end, the supply of new homes is expected to fall meaningfully and improved affordability is driving pent-up demand,” strategist Wen Ching Lee at the UBS chief investment office for wealth managment said in the note.

“Sentiment among property buyers and developers has improved. Transaction volumes are starting to rise, prices have rebounded moderately and developers have been boosting their land-bank more aggressively,” she added.

She also pointed to bullish bids at recent land tenders and a pickup in collective, or en bloc, sales. Government data showed that in the first quarter, the private residential property price index rose 3.9 percent on-quarter, for a third straight on-quarter increase, the note said.

UBS said its base case is for private residential property prices to rise 5 percent this year.

“Property developers will be the main beneficiaries of this recovery, though banks also stand to gain from a more buoyant mortgage market,” the note said.

The chief investment office added five stocks to its most preferred list: UOB, OCBC, DBS, City Developments, UOL and CapitaLand. It offers only two equity selections: most preferred and least preferred.

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