Resilient demand for Sunway's and IOI Properties' projects in Singapore despite property cooling measures, says HLIB

KUALA LUMPUR (April 28): Hong Leong Investment Bank (HLIB) Research said property developers with projects in Singapore could experience resilient local demand despite the new rate for the republic's Additional Buyers' Stamp Duty (ABSD).

The duty stamp, announced by Singapore's Ministry of National Development, is a property cooling measure to dampen investment demand and prioritise housing for locals meant for owner-occupation. It took effect on Thursday (April 27).

In a research note on Friday, analyst Tan Kai Shuen said that despite the Singaporean government having introduced several cooling measures in the past two years, property prices remained resilient and surged by 10.6% in 2021 and 8.6% in 2022.

"Even with sustaining or moderating growth in home prices, we believe both Sunway Bhd and IOI Properties Group Bhd should still be able to launch the projects at decent price points," he said.

He noted that Sunway had launched the Terra Hills private condominium at Pasir Panjang on Feb 25. It has an effective gross development value (GDV) of RM700 million and had achieved 38% sales over the same weekend.

Sunway is expected to launch The Continuum with an effective GDV of RM2 billion in May 2023.

Tan added that IOI Properties is targeting to launch its Marina View project in the fourth quarter of 2023 with estimated GDV of RM8.6 billion.

"The Marina View project is one of the very few residential projects in the core central business district (CBD) area, which should make it highly desirable and help to maintain demand," said Tan.

"The projects should still enjoy resilient demand supported by local buyers who have strong spending power thanks to their robust economy."

Meanwhile, he said that the cooling measures will have a larger impact on luxury and high-end homes, thus moderating growth in home prices in the segment.

"With ABSD rates doubling for foreigners, it is likely that the demand by foreign buyers will be dented," said Tan, adding that ADSB for foreigners has increased to 60% from 30% on any residential property.

HLIB Research has maintained its "overweight" call on the property sector, and "buy" calls on Sunway (target price [TP]: RM2.65), IOI Properties (TP: RM1.42) and OSK Holdings Bhd (TP: RM1.60).

In the morning trade, Sunway's share price decreased one sen or 0.63% to RM1.57, giving its market capitalisation of RM7.75 billion.

IOI Properties fell one sen or 0.84% to RM1.18, valuing the company at RM6.5 billion.

OSK's share price remained unchanged at 97 sen and its market capitalisation was RM2.02 billion.

Source: The Edge