According to the latest market data, the Singapore property index has dropped by 9.5% this year. The net profits of some developers have significantly decreased due to high interest rates and reduced returns from their property portfolios, leading to cases of net losses. Companies like Keppel Corporation, City Developments, and UOL Group have experienced significant impacts on their net profits. Additionally, there has been a decline in private residential transaction volume, with housing demand facing some suppression.
The slowdown in the Chinese real estate market has also impacted Singapore developers with operations in China. The strict real estate control measures implemented by the Chinese government have weakened market demand, affecting the sales and returns of Singapore developers' projects in China.
Nevertheless, some analysts maintain an optimistic outlook for diversified developers, believing that these companies can offset fluctuations in real estate development income through recurring income generated from real estate investments. Particularly, companies with diversified investments in multiple locations, including hotels, retail, logistics, and office buildings, such as Wing Tai Holdings, GuocoLand, UOL Group, and Ho Bee Land. These companies have reduced their dependence on the real estate market through diversified business layouts, increasing income stability and sustainability.
It is worth noting that Ho Bee Land and GuocoLand are viewed favorably by some analysts who believe they have redevelopment potential. Ho Bee Land operates over 40 global hotels, providing a stable source of recurring income beyond real estate investments. Moreover, the new private residential projects launched by these developers have performed well, further enhancing their competitive advantage.
However, there are also cautious opinions. Yang Huishi suggests that developers will still face profit pressures, and high-interest rates are expected to persist for some time. The U.S. Federal Reserve has not yet achieved its goal of reducing the inflation rate to 2%, so interest rates are expected to continue rising. Additionally, banks may charge higher loan interest rates for developers with high leverage, increasing the developers' financing costs.
