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City Development, UOL Group eye worst session in 2-1/2
years
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Foreigners stamp duty to hit 60%
(Adds analyst comment, changes slug to
SINGAPORE-PROPERTY/STOCKS)
SINGAPORE, April 27 (Reuters) - Shares of Singapore
property companies fell sharply on Thursday after the government
raised taxes on private property purchases, including doubling
stamp duty for foreigners to a whopping 60%.
By midday, shares of City Developments were down
6% and UOL Group down 5%, with both eying their worst
sessions in 2-1/2 years as investors reckon their margins will
be squeezed.
Rising prices have prompted previous government
intervention, but the latest move is the strongest yet and is
hitting buyers right as more supply is being finished.
"Demand is very sentiment driven," said Paul Chew, head of
research at Phillip Securities Research in Singapore.
"Any developer right now will be cautious and might launch
at attractive prices or even much thinner margins."
He said further losses were limited as the new measures
don't target first home buyers, who comprise most of the market,
and as previous efforts to cool the market haven't stopped
prices marching on to new records.
Authorities announced the tax hikes, which also hit locals,
albeit at much lower rates, late on Wednesday and said they were
in response to "renewed signs of acceleration".
Stamp duty on foreigners' property purchases doubled to 60%,
effective from Thursday. Duties on Singaporeans' second and
subsequent home purchases rose to 20% from 17%, and 30% from
25%, respectively.
City Developments and UOL Group had no immediate response
when contacted by Reuters. It and UOL share reasonably high
exposure to the residential market. UOL's 2022 annual report
showed residential developments, mostly in Singapore, accounted
for some 62% of revenue and almost 40% of profit.
Development accounted for 42% of last year's revenue at
City, its annual report showed.
"These (stamp duty) hikes will likely have a broader and
more hard-hitting impact on the residential property market
compared with the relatively targeted nature of the measures
announced (last September)," Barclays analysts said in a note.
The broader Straits Times index fell 0.5%.
(Reporting by Rae Wee; Editing by Jacqueline Wong and Sam
Holmes)
