Singapore Property Rule Easing May Start Regulatory Shift

(Bloomberg) -- Singapore’s decision to remove a restriction on home builders may be the the first step to unwinding cooling measures on the sector, according to analysts.

Publicly listed housing developers with a “substantial connection to Singapore” will be exempt from the requirement to complete development within five years and sell all units in a project within an extra two years, the Ministry of Law and Singapore Land Authority said in a statement on Thursday.

Still, the government said it isn’t making changes to existing property market cooling measures and all developers will continue to be subject to the prevailing Additional Buyer’s Stamp Duty.

“In light of the current subdued market sentiment and the challenging economic outlook, we hope that the Government will continue to review market conditions and make further policy tweaks,” a spokesperson for City Developments Ltd. said in a statement.

Shares in City Developments fell 0.3% and UOL Group Ltd. dropped 0.2% as of 2:50 p.m. in Singapore, both erasing advances of more than 1%.

Here is what the analysts are saying:

Citigroup Inc. (Brandon Lee, Si Xian Goh)

  • “We think the market may view the move as a sign that the government could ease more existing cooling measures.”
  • Developers will prefer “the abolishment or reduction of Additional Buyer’s Stamp Duty, which is more punitive.”
  • The government’s move might result in a knee-jerk positive impact on developers similar to what happened when seller’s stamp duty was removed in 2017.
  • Developers with unsold inventory from en-bloc market will benefit.

Jefferies Financial Group Inc. (Krishna Guha)

  • Authorities are signaling “a willingness to address the concerns of local developers while keeping the overall residential market in line with economic fundamentals, especially in what could be an election year.”
  • Selective easing helping local builders while maintaining price stability.
  • Maintains buy on City Developments.

Credit Suisse Group AG (Louis Chua)

  • “We view the QC rule change as an indication the government is cognizant of maintaining a stable property market, both in terms of capping excessive euphoria and providing downside support.”
  • Remains positive on UOL Group and City Developments.

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