PREDICTABILITY OF RETURNS OF PROPERTY STOCKS IN SINGAPORE

Abstract

Although real estate has long been recognised as a form of investment, it was not included substantially in the investment portfolio of many investors until recently, and since then, businesses and financial derivatives of real estate have increased exponentially over the past decade. In this dissertation, we look at the returns of the stocks derived from real estate operating companies listed in the Singapore Stock Exchange, and determine whether if there is any consistency in the returns of these property stocks. This was done so by using the Spearman Rank Correlation Coefficient test, which allows one to determine whether property companies were ranked consistently in terms of their returns. Determining whether there is consistency in the returns of real estate companies in Singapore would allow an investor to make an informed decision should he decide to add Singapore property stocks to his investment portfolio. From the findings, it could be determined that on a monthly and yearly basis, the returns on real estate operating companies was indeed predictable, if one includes dividends of each individual stock as part of the returns. However, should one look at capital appreciation alone and not include dividends, the results showed that most of the results were insignificant, and for the few results that were significant, most of them showed negative correlation, which was similar to previous studies conducted.