Developers forecast to focus on clearing unsold units

This is amidst the new changes to property measures.

On 17 March, the government announced a few changes to property measures.

Jefferies said in a research note that without reading too much between the lines, last week’s announcement does not feel too surprising even though it may be a post hoc rationalisation.

On impact on developers, Jefferies equity analyst Krishna Guha said that there has been a spurt in residential property activity.

“Developer sales and resales transactions are up year-on-year. The growth has been driven primarily by Singaporeans, with foreign purchases accounting for less of the share,” noted Guha.

Here’s more from Jefferies:

Whilst this should help developers clear some of their unsold inventory, will it lead to NAV growth? We are a bit circumspect.

Competition for land banking is stiff, resulting in low double-digit margins. So, in deciding between project and profitability, developers will have to take a 4-5 year forward view on sales price.

Given a rising rate environment, uncertain global growth outlook, and demand-side measures still in place, developers may think that margins don’t compensate for the future risks.

So, initially developers are likely to focus on clearing unsold inventory. For example, Wing Tai relaunched sales at The Crest just after Seller’s duties were lowered.

It remains to be seen what the uptake for the premium-priced development will be. 1BR starts from S$1.3M (~630 sq ft). Nearby Queens Peak, next to Queenstown MRT, 1BR starts from S$768K (~490 sq ft)

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