Which developer is most at risk from hefty extension charges?

Trouble is brewing for smaller players.

Smaller property developers will be most impacted from hefty extension penalties due to unsold private residential units, revealed a report by UOB Kay Hian.

UOB Kay Hian used a worst-case scenario with the following attributes: a 40% decline in the average selling prices (ASPs) of residential properties from their 2013 peak, a 40% decline in capital values of commercial and retail properties in Singapore, and a 40% decline in capital values of overseas properties and associate contributions.

In its burn-down analysis, it became apparent that large listed developers will be able to weather the storm fairly easily, but the same could not be said of smaller players.

Heeton Holdings will be the most negatively impacted from extension charges. The group will have to pay $63.5m in the worst-case scenario, which will represent 20.7% of its net asset value (NAV).

Heeton Holdings will be followed by other smaller players like Sing Holdings, Sysma Holdings and Top Global.

Among listed developers, Oxley Holdings will be among the most vulnerable to extension charges, followed by Goodland Group, Tee International, Ley Choon and GuocoLand.

Meanwhile, large developers like Hongkong Land, Frasers Centrepoint, UOL Group, and CapitaLand will be among the least impacted by extension charges.

“Singapore’s largest developers under our coverage remained relatively unscathed, with extension charges accounting for about 2-7% of book value. CapitaLand and City Developments (CDL), for example, saw up to a 5% hit on book values. Most were able to stomach the potential losses with sizeable cash. In contrast, smaller players like Heeton Holdings (20.7%) and Sing Holdings (20.5%) bore the brunt of the severe impact on book value,” said the report.