The worst is not over for Singapore’s property market, after government curbs helped push home prices lower for a third year last year, City Developments Ltd’s (城市發展) billionaire chairman Kwek Leng Beng (郭令裕) said.
“I do not believe the worst is over, although I think the worst has slowed down,” Kwek said in a Bloomberg Television interview with Haslinda Amin.
Singapore home prices fell 3 percent last year as the government held steadfast on cooling measures. Prices slipped for a 13th straight quarter in the three months ended on Dec. 31 last year, the longest streak since data was first published in 1975.
The government has signaled it is reluctant to ease property curbs, including capping debt repayments at 60 percent of a borrower’s income and higher stamp duties, as it wants to avoid the market overheating again.
City Developments’ fourth-quarter profit declined 41 percent to S$244 million (US$172 million) due to the absence of substantial profits recognized the same quarter a year ago from its so-called profit participation securities deal for office assets. Revenue for the quarter increased 37 percent to S$1.17 billion.
The developer last year sold 1,017 homes in Singapore, a 51 percent increase from 2015, for a total value of S$1.2 billion. For the year ended on Dec. 31 last year, profit declined 16 percent to S$653 million even as revenue climbed 18 percent to S$3.9 billion.
Residential prices might take up to nine months to show signs of a recovery, Kwek said.
Luxury homes are a good buy because prices have fallen by about 35 percent since 2013, he said.
“A lot depends on the oversupply and the penalties we have to pay if we don’t sell in a certain time,” Kwek said. “In light of the lower interest environment the developer will try to hold on for as long as possible, after a certain point when he has no choice he will have to cut the price.”
“We plan to be more acquisitive with a focus on finding in-place income in Singapore and overseas,” Kwek said in the earnings statement. “Our robust balance sheet and war chest place us in a strong position to deploy capital for acquisitions which can be in the form of physical assets, equities or debt instruments.”
The developer has more than S$3.5 billion in funds under management and is on track to achieve its target of S$5 billion by end-2018.
Singapore property demand remains “very resilient,” supported by factors including low interest rates and a stable economy, Singaporean National Development Minister Lawrence Wong (黃循財) said in an interview on Tuesday.
The cooling measures “have helped to achieve a soft landing in the property market,” Wong said.
Earlier this month, rival CapitaLand Ltd’s (凱德) chief executive officer Lim Ming Yan said property curbs are set to stay in place for at least another year amid signs the city-state’s housing market is stabilizing.
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