SINGAPORE: City Developments Limited (CDL) said on Thursday (Nov 8) that its net profit rose 10.4 per cent in the third quarter and projected confidence in the market going forward, even as it cautioned against macroeconomic uncertainties and persistent headwinds for the Singapore residential property market.
Net profit for the three months ended September rose to S$161.8 million from S$146.6 million in the same period last year, underpinned by the strong contribution from property development in Singapore, China and Japan, said CDL in a stock exchange filing after market close.
Revenue rose 17.7 per cent to S$1.02 billion during the period, with the property segment contributing the largest portion at 46 per cent. Its hotel operations followed with 42 per cent of the revenue, and rental properties contributed 9 per cent.
“Notwithstanding global macroeconomic uncertainties and persistent headwinds for the Singapore residential property market, the group has continued to achieve an encouraging set of results for another quarter,” said CDL executive chairman Kwek Leng Beng.
“Given the rapidly evolving business landscape, our diversified business in terms of product, sector and geography has helped us to weather headwinds that may impact any specific sector,” he added.
CDL, which has assets in several countries, spent S$2.5 billion on acquisitions and investments in the first nine months of the year.
This included £183 million (US$239.8 million) for Aldgate House in London and RMB148 million (US$21.3 million) for an office block within Yaojiang International complex in Shanghai’s prime North Bund district. It also co-invested S$990.2 million for Executive Condominium (EC) Government Land Sales (GLS) sites at Handy Road, West Coast Vale and Sumang Walk.
Year-to-date, CDL sold 787 residential properties in Singapore valued at S$1.56 billion. This compares with 1,056 homes worth S$1.76 billion it sold in the same period last year, CDL said, adding that 2017 sales were driven primarily by inventory at Gramercy Park, Commonwealth Towers as well as The Brownstone and The Criterion ECs.
HARSH COOLING MEASURES
CDL noted the “unexpectedly harsh property cooling measures” implemented by the Government in July, which it said “disrupted the private residential market that was just recovering”.
“Against this challenging backdrop for the Singapore private residential market, the group is cognisant that sales volumes for new residential launches will likely be impacted by the cooling measures as certain buyers adopt a wait-and-see approach, becoming more selective and price-sensitive in their purchases,” it said.
“Nevertheless, the group had selectively acquired prime sites early in the property cycle that cater to a wide spectrum of the market – from EC, mid to high-end, and has been diligently curating these sites to offer maximum value ... The group remains confident that its developments offer strong value,” it added.
The developer also noted the revised guidelines to increase the minimum average unit size for non-landed residential projects in the Outside Central Region and reduction of bonus gross floor area cap for private outdoor spaces, but added that it will not be affected.
“The group is not impacted by these latest revisions since its acquired sites, namely Amber Park, West Coast Vale (now known as Whistler Grand), Handy Road and Sumang Walk EC, have all obtained Planning Permission,” it said.
“For its joint venture Sengkang Central GLS site, the group is already in advanced planning stages having won this site via the dual-envelope system and is on track to obtain its PP before the timeline. The group will take these new guidelines into consideration in its future land tender assessments,” it added.