According to Morgan Stanley, a Singapore style property bull run may last till 2020, estimating the city state home prices to climb by at least 8 per cent in 2018.
Property analyst Mr Wilson of Morgan Stanley said, valuations across all Singapore developers were deemed to be very attractive in terms of allowances to net asset value as well as P/B ratios. They have especially high ratings for both City Developments (CDL) and CapitaLand currently.
Fund managers foresee that shares of Singapore property holdings will experience a rally from now till 2018 at least on a bottoming out housing market. After gaining double digits in 2017, Mr Wilson sees a 24% and 42% jump in shares in the coming 12 months from both City Developments and CapitaLand respectively.
Property firms in Singapore are already on track for their best performance since 2012 while developers such as UOL Group and City Developments are the winning performers this year.
There are many promising signals prompting a Singapore property market revival such as record land deals in value, the first ever home prices increase in the past 4 years and the collective sales fever going forward.
However, this seemingly buoyant sentiment has been somewhat thwarted by a statement issued from the Monetary Authority of Singapore (MAS), flagging the risk of more unsold residential units amid the slowing down of population growth but according to property watchers, every residential project requires a minimum of 3 years to completion thus the risk of having oversupply damage does not look that imminent.
In fact, most of the resulting development numbers will not hit the local market before 2020 as the city state only began to increase the supply of available land for open tender bidding. Said Mr Raj, director of Tolaram family, managing US$500 million and owning shares in Singapore listed property firms CapitaLand, Guocoland and Frasers Centrepoint.
Having said that, it doesn’t seem like everyone is being positive on Singapore’s property market. Mr Teo, a trading strategist from KGI Securities (Singapore) shared that there are essentially a lot of factors in play for any sustainable home prices rally. They include the rising interest rates from the US Federal Reserve, rising vacancy rates and weaknesses in the domestic rental demand. Additionally, the government has in place some of the most stringent home buying restrictions that will probably limit the home prices from sky rocketing.
So which camp will you be sitting on?
Will you be the firm believer on the up cycle preparing for a fantastic bull or the bearish side of crowd hoping to witness more turbulence on the local market scene?
If you are bracing yourself for a bull run and considering making a purchase or invest on our local property market in the next few months like everyone do to avoid the “impending” increase of 8 per cent forecast then probably and most likely, home prices in Singapore will continue to increase albeit rather slowly as compared to bitcoin!
But if you’re still sceptical about the outlook of it, please hold on tight to your cash and we shall come back to this page again at the end of 2018.