Markets Slide On Proposed Changes To En Bloc Law

Source : TODAY, Wednesday, August 29, 2007

Singapore property stocks fell yesterday, hurt by the Government's proposed changes to laws on collective property sales.

The Singapore Property Equities Index fell 1.13 per cent to 1445.27. CapitaLand fell 0.7 per cent to S$7.40, while luxury developer Wheelock Properties slid 3.8 per cent to $2.56.

Analysts attributed the falls to proposals aimed at making the en bloc sales process clearer and fairer. By October, such sales may require a public tender and a five-day "cooling-off" period, during which owners can withdraw from their sale agreements.

"It would take longer to do en bloc transactions (with the amendments)," said DBS Vickers property analyst Wallace Chu.

UOB Kay-Hian said the additional safeguards would make en bloc processes "more difficult in general", and with fewer en bloc sales, property price increases could slow.

CIMB-GK property analyst Donald Chua said the moves come on top of earlier government measures such as higher land development charges, which were "perceived to be cooling the (property) market". Concerns about the sub-prime mortgage meltdown in the global credit markets, while not directly related to property stocks, also drove down investor sentiments, he said.

"The physical property market was already expected to cool down, and investors are now just taking a step back to reassess what are the stocks that still have value," he said.

He does not expect property stock prices to recover to previous highs until sentiment recovers, and provided that more clarity on the sub-prime impact emerges and there are no draconian measures from the Government. "But office property will still be going strong, as they rely on fundamentals, while the residential-sector is more sentiment-driven," he said.