By Gabriel Gan

A 20% correction in any index, or a stock, is considered bearish; some say that a 20% correction signals a bear market. As a picture of optimism is being painted of Singapore’s property market amid waves of enbloc activities and new launches, property stocks have floundered.

In 2017, property developers bought $8.17 billion worth of properties through enbloc transactions. In 1Q2018 alone, some $5.83 billion worth of enbloc properties were sold.

Strangely, there is a negative correlation between physical properties and property stocks right now and the only explanation that I can give is that the market does not expect the bullish trend in physical properties to be sustainable. We have to remember that the stock market is a leading indicator for the health of the economy and, in this case, the prices of property stocks are telling us that the physical property market is probably overheated.

Property prices of new launches and enbloc prices on a per square foot per plot ratio basis are still going up but the share prices of bellwether such as CapitaLand, City Developments, Wing Tai and Oxley Holdings – an active player in the enbloc market in 2017 – have been trending down.

What are the factors contributing to this disconnect?

  1. Rising Interest Rate

Rising interest rates are a bane for the property market. It adds on to the financing cost of owning a property for the end users as well as project cost for the developers. Developers who are highly geared tend to get hit the most when a downturn arrives.

When investing in property stocks for the long-term, we need to look up the gearing ratio (level of borrowing) of the developers. Examples of companies with huge borrowings going belly up when a cyclical downturn comes are the oil and gas companies.

  1. Economic Downturn

Trade war or no trade war, some economists expect the global economy to slow down to 2019. It is self-explanatory that a slowdown, especially in China where Singapore properties are marketed directly to Chinese buyers , will hit property sales.

  1. Oversupply

While the government has said that the supply glut for HDB flats has somehow been solved, this has yet to translate into a meaningful increase in HDB resale prices as well as private residential resale prices. The enbloc wave will inject a massive amount of supply into the market, and it is not known if there are enough buyers to absorb the supply despite plenty of millionaires out there who have benefited from the enbloc sales.

City Developments

After trading as high as $13.59 on 13 March 2018, the share price of City Developments have been on a downward spiral. As at 2 July, the share price close at $10.88 but not before trading as low as $10.70 on the last trading day of June. From its peak of $13.59 to its closing price of $10.88 on 2 July, the developer’s share price lost a total of 19.99% – a whisker away from bear market territory.



On the final trading day of January 2018, the share price closed at $3.87. It last closed at $3.14 on 2 July, which represents a loss of 18.86% over a five-month period.


Wing Tai

The double-top formation (October 2017, January 2018 peaks) killed the share price. From a high of $2.44, the share price closed at $1.98 on 2 July. It fell to as low as $1.89 on 25 June. From January 2018 to 2 July, Wing Tai’s share price shed a total of 18.85%.



At the forefront of the enbloc activities is Oxley Holdings, whose share price tanked quite substantially despite the enbloc transactions it entered into. In January 2018, its shares traded as high as $0.60 but is now changing hands at $0.405. That is a loss of 32.5%.


Gabriel Gan was a Senior Vice President at AmFraser Securities. He left to join DMG Securities (now renamed as RHB Securities) to take on a similar role. During his stints at the stockbroking firms, he dealt in equities, performed advisory role and executed corporate finance deals for his clients.

Since 2001, he has been invited by the media (both Mediacorp and SPH) for his stock market opinions. On radio, he spoke on 95.8FM for more than a decade; he now speaks every Wednesday and Thursday mornings on SPH radio 96.3 FM, delivering his opinion in Mandarin. On TV, Gabriel appeared on Channel NewAsia, the former Channel U and various Channel 8 financial segments including Good Morning Singapore, Hello Singapore and MoneyWeek. On print media, he continues to give quotes and comments on the economy and stock market for Lianhe Zaobao, Lianhe Wanbao and Shinmin Daily. On top of that, Gabriel was a columnist for the now defunct My Paper.

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