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A lack of investor confidence following Black Monday will have a lasting impact on the growth potential of the Singaporean property market.
Summary:
Black Monday is set to cast a long shadow over the Singapore property market.
The lack of investor confidence that is now spreading through the region will badly affect the delicate nature of the market.
Prior to the mass slide of equites and the devaluation of the yuan two days ago, investors had been wary of a cooling market. A recent OPP Today interview with Excell Chua, Business Development Director at Asian website PropertyGuru, summarised the longstanding issues.
He said even before Black Monday, the Singapore property market was unlikely to make a quick recovery.
“The Monetary Authority of Singapore mentioned just last month that it’s too premature to ease the policies. We are probably looking at a period of stagnation for the next two years. Factors dragging the property market include increasing private housing inventory (surpassing the demand), rising vacancy rate, lower GDP growth, slower population growth, slower labour productivity growth and increasing restrictions on foreign talent, among other things,” said Chua.
Asian investors left equities markets in large numbers on Monday, with China’s Shanghai Composite index posting its biggest one-day percentage in eight years, as fears about the region’s economic health multiplied.
A recent analyst note from JPMorgan explained the majority of property stocks with Chinese exposure do not hedge the currency exposures of their incomes and balance sheets and a weaker yuan will lower both asset values and dividends.
It is expected property markets far removed from the impact of Black Monday, such as UK real estate, will now experience further demand as investors look to diversify their portfolios accordingly.
Source: Select Property.com