Property stocks in S’pore fall while banks gain as higher-for-longer rates reshape market outlook

Property stocks fell this week as the US Federal Reserve signalled rates may stay higher for longer. Read more at straitstimes.com.

SINGAPORE - Property stocks in Singapore fell this week as the US Federal Reserve signalled rates may stay higher for longer with inflation risks rising amid the Middle East conflict.

The US Federal Reserve maintained interest rates at 3.5 per cent to 3.75 per cent on March 18, the second consecutive hold, while noting elevated inflation risks due to geopolitical conflict.

City Developments Limited (CDL) shares fell 6.8 per cent over the week to $8.42 on March 20, while peer UOL declined 3.1 per cent to $9.98, as investors reacted to expectations that interest rates will stay higher for longer - raising borrowing costs for developers and potentially dampening demand for property.

JPMorgan analysts Mervin Song and Terence Khi downgraded the two property giants to “neutral” from “overweight” on March 16, citing a tougher macroeconomic environment, especially with the Middle East conflict.

The analysts said tensions involving Iran could make CDL’s asset monetisation efforts more challenging even as its earnings are expected to recover, supported by record residential sales in 2025, a resilient housing market and relatively low borrowing costs, with the three-month Singapore Overnight Rate Average at around 1.1 per cent.

They cut their target prices for CDL to $8.70 and UOL to $9.55.