According to the asset manager Henderson Global Investors, the currents stocks in Singapore are cheap but any forms of aggressive purchasing of property firms in Singapore might not be sustained.
Henderson Global Investors said that mainland China and Hong Kong are the best bets of the regions for now. The current Singapore property market bases don’t seem as good as the other markets.
“There is an oversupply issue in Singapore and the balance sheets of developers and to some extent, the real estate investment trusts (REITs), are more stretched”, Mr. Patrick Sumner, head of property equities team of Henderson, said yesterday at a media briefing.
In fact, REITs and Singapore developers are, up to now, seeking to raise more funds, said co-head of property equities (Asia) of Henderson, Mr. Frankie Lee.
“We need to see some sort of stabilisation in the banks, in manufacturing, a bit of growth in jobs before we can see confidence come back into the property market. So, stocks are cheap. But are we having a new driver of economic growth?” Mr. Lee asked.
He said that Singapore private property values may drop by another 15 percent before it will hit the low point – and recovery is only expected by the second half of 2010. He added that vacancies in office and home sectors have not yet reached its peak.
However, mainland China and Hong Kong “have emerged from a bruising 2008 with some resilient production numbers since the start of the year”, Mr Lee said.
“We think both will continue to outperform in the long term, relative to both developed and emerging Asia property markets. We believe that the sector fundamentals are gradually improving rather than deteriorating”.
The Asian stocks favoured by Henderson included Yanlord Land, China Overseas Land as well as Sun Hung Kai Properties.