Shares of major property developers in Singapore were battered Monday after the government introduced new measures at the weekend to cool the real estate market.
By the closing bell, shares of top developers listed on the Singapore Exchange had sunk more than four percent as investors spooked by the measures dumped the stocks.
CapitaLand closed 4.11 percent lower at Sg$3.73, City Developments fell 7.54 percent to Sg$11.65 and Keppel Land slumped 7.24 percent to Sg$3.97.
"We're seeing a knee-jerk reaction to the cooling measures," said Jason Hughes, head of premium client management for IG Markets Singapore.
The new measures, which came into force Saturday, included sharply higher duties on property purchases by foreigners.
Singaporeans' minimum cash downpayments for second or subsequent homes were raised from 10 to 25 percent of a property's value.
But Hughes predicted property stocks would be able to ride out the storm thanks to their overseas portfolios.
"We do have to consider that a number of these guys are regionally focused," he said, adding that the effect would have been more severe if they had been purely local developers.
HSBC Global Research said in a report that Singapore may institute more cooling measures because property demand is expected to remain robust.
"Low interest rates and an expected economic recovery this year will support demand. Further steps can, therefore, not be ruled out," the report said.
The measures were imposed after home prices continued to rise even as the city-state suffered an economic slowdown. It narrowly avoided a technical recession in the last quarter of 2012.
The economy grew just 1.2 percent in 2012, from 4.9 percent in 2011. Expansion this year is forecast at 1.0-3.0 percent.