Knight Frank sees interest in plot near ITE East (Yishun) due to recent strong take-up in Woodlands

FOR the second time in a week, the government will be putting an industrial site in Yishun up for tender.

According to the Urban Redevelopment Authority (URA) yesterday, a developer triggered the sale of a 60-year leasehold site at Yishun Avenue 6 (Parcel 8). The developer – which was not identified – committed to pay at least $11.5 million, or around $30 per sq ft per plot ratio (psf ppr), for the land.

The 1.43 ha plot on the reserve list has been available for sale since November 2007. It is zoned for Business 1 use and has a maximum permissable gross plot ratio of 2.5.

This parcel is across the road from ITE East (Yishun) and is near Yishun Industrial Park and Yishun MRT station. It also seems to be adjacent to another site – at Yishun Avenue 6 (Parcel 1) – which was similarly triggered for sale on Tuesday. For the latter, a developer also committed to pay at least $11.5 million.

Knight Frank’s head of industrial business space Lim Kien Kim believes that there will be interest in Parcel 8. This is because industrial space end-users have been looking for land in the northern part of the island, he said.

He added that industrial space in Woodlands has recently seen strong take-up, and this could encourage developers to bid for the site.

Mr Lim felt that offers could reasonably be expected to come in at around $35 psf ppr, or $13.4 million. But he pointed out that with buoyant sentiment in the market, higher bids are possible.

URA will launch the public tender for the site in about two weeks.

Demand for industrial plots has been strong in the last few months. In December, a 30-year leasehold site at Pioneer Road North/Soon Lee Drive drew eight bids, with the highest coming in at $19.4 million, or $48 psf ppr.

Source: Business Times, 27 Feb 2010

China’s property market will probably go through a “more meaningful correction” this year because the price gains in 2009 aren’t sustainable, according to Mr Christopher Lee, corporate ratings director at Standard and Poor’s.

The outlook for the Chinese market is “neutral” for this year, Mr Bei Fu, an associate director of corporate ratings at S&P, said during a conference call with Mr Lee on Thursday.

“The middle of this year could be a potential turning point for many developers,” Mr Fu said. “A combination of slower demand, higher supply and various government initiatives will dampen market sentiment.”

China’s property prices surged 9.5 per cent in January, the most in 21 months, as total new loans surged to 1.39 trillion yuan ($287 billion), more than in the previous three months combined.

The China Banking Regulatory Commission ordered banks last month to “strictly” follow property lending policies.

Investors tend to “sit on the sidelines” in anticipation of more tightening measures to curb property price gains this year, Mr Lee said.

Gradual and Cautious

Beijing will scrap some home-purchase incentives after the jump in prices, reducing the scope of a housing sales-tax exemption and enforcing a 40-per-cent down-payment requirement for second homes, the capital’s Municipal Commission of Housing and Urban-Rural Development said earlier this week.

The People’s Bank of China raised the reserve requirement by 50 basis points for the second time this year on Feb 12 to slow bank lending. The hike came into effect on Thursday.

The central bank said in its quarterly report that it wanted to gradually normalise monetary conditions from a “crisis mode” after gross domestic product grew 10.7 per cent in the fourth quarter, the fastest pace in two years.

“Policy introduction this year will be in a gradual and cautious manner,” Mr Fu said.

“Stability will be the focus.”

The Chinese government will increase supply of subsidised public housing this year to provide affordable accommodation for people with lower incomes, and there will be a “surprise” in the number of available luxury homes by the middle of this year, when projects started one year ago are completed, leading to stronger competition among developers, she said.

Industry Consolidation

“Bigger and stronger property players will do even better as they have the scale and financial resources to grow, and smaller companies will find the market condition more challenging,” Mr Fu said. “We expect to see more merger and acquisition activities in the sector.”

China Overseas Land & Investment, a developer with a BBB- credit rating from S&P, the highest among 11 Chinese developers the ratings company analysed, will benefit from industry consolidation this year, S&P said. China Overseas, which is owned by the nation’s construction ministry, is poised for a “possible upgrade,” the report said.

Companies rated B+ and below, including Greentown China Holdings and Shanghai Zendai Property, may become potential acquisition targets, according to the report.

Source: Today, 27 Feb 2010

THE improved property market has prompted the Government to raise the fees developers pay to enhance the use of residential sites.

The fee – called a development charge (DC) – closely reflects recent land and property values as it is adjusted every six months.

A developer pays a DC if he wants to intensify the use of a site, for instance, by redeveloping an existing project into a bigger one.

Rising values – and developers bidding aggressively for suburban residential land – have forced the Government’s hand, although the increases were mostly within expectations.

From next Monday, the DC will go up by about 12 per cent on average for landed homes and around 8 per cent for non-landed properties. But the rate for commercial sites has dipped given the muted market.

The new rates highlight the rapid rebound in residential property. The DC for landed homes had not been revised for two years, while the non-landed rate was down 2 per cent six months ago.

Experts say the higher charges will add to developers’ costs and could affect collective or en bloc sales and the conversion of office buildings to residential use.

The DC rises vary across the island.

While the average rise for landed properties is 12 per cent, the DC will jump by around 17 per cent in the prime areas of Tanglin, Holland and Bukit Timah, the HDB towns of Hougang, Toa Payoh and Ang Mo Kio, and Sentosa.

The DC for Sentosa rose the most – by 17.3 per cent – this round, supported by the recent strong transaction volume in that area, said Jones Lang LaSalle.

The largest rise in the non-landed homes sector will be a hike of 15 per cent in the mass-market areas of Mountbatten and Katong, as well as in Paya Lebar, Eunos, Bedok North, Simei and Tampines.

The central areas of Spottiswoode Park and Cantonment, Orchard Road and Sentosa Island also saw double-digit rises, because of surging prices and some recent land acquisition activity.

‘Overall, the rise in non-landed residential (development charge) rates is expected to add to developers’ land banking costs – particularly for collective sale sites that require payment (of the charge),’ said Colliers International’s executive director of investment sales, Mr Ho Eng Joo.

This may hamper or derail their land banking plans, he added.

It is a different story in the commercial sector, where DCs will go down 2 per cent on average, with the exception of booming Sentosa, where the rate will go up by 13 per cent.

Rates will fall by up to 13.3 per cent around Raffles Quay and Shenton Way.

The dip for commercial property will be welcomed. The office sector has been subdued, land sales during the review period have been muted and the business environment is still uncertain despite signs of recovery, said Colliers International.

The Central Business District (CBD) will also see the completion of about 2.2million sq ft of office space this year, raising the real threat of a damaging oversupply.

‘A cut in DC rates in these locations will hence provide the necessary stabilising effect to the market, amid daunting concerns about the potential supply,’ said Mr Ho.

Consultants also noted that the fall in commercial DC rates in the CBD will be met with a rise in residential rates.

‘This would affect the conversion of office buildings to residential uses in the CBD, especially those on leasehold land as they would also have to top up the lease,’ said DTZ’s head of South-east Asia research, Ms Chua Chor Hoon.

There are a number of players that are keen to convert and they will have to recalculate their sums as the DC rates have increased, said Mr Ho.

Sentosa is the only area of the country that registered a rise – of 12 per cent – in the DC for the hotel and hospital sector, which will remain untouched everywhere else.

Sentosa is paying the price of the integrated resort, which has pushed up values and, hence, the DC increases in the landed residential, commercial and hotel/hospital sectors, said Ms Chua.

The National Development Ministry sets the rates every March and September in consultation with the Chief Valuer.

Source: Straits Times, 27 Feb 2010

HOUSING is a perennial hot topic of discussion, especially in Singapore where it touches almost every segment of society – from the low to middle income in public housing to the middle and higher income aspiring to upgrade to private property.

The recent spikes in both public and private housing prices have added fuel to the debate on affordability. Analysts and experts have attributed the price increase to a rise in demand, especially from foreigners and permanent residents.

What is clear is that housing demand changes constantly, which means that government policies seeking to offer decent and affordable homes have to keep changing too.

The International Housing Conference last month, organised by the Housing and Development Board (HDB) to mark its 50th anniversary, gave the housing authorities a platform to share ideas and strategies.

Even with the best of intentions, it is often hard to give people equal access to affordable housing because of uncertainty about the number who need it as well as an inelastic housing supply.

This commentary aims to compare the housing situation in Singapore, Hong Kong, London and Sydney.

As with most countries, Singapore’s housing provision system is rooted in its historical and political background. During the initial years of independence, the Government adopted a subsidised rent system to resolve an urgent housing shortage.

However, by 1964, it was decided that home ownership was a better strategy as it was thought that citizens would be more likely to sink their roots in the country if they owned a stake in it. This marks the first deviation from public housing systems in countries with a strong welfare focus, such as the United Kingdom and the Netherlands. By the late 1970s, when many welfare countries were starting to revamp their public housing systems due to economic reasons, public home ownership was thriving in Singapore because of the development of the resale market for public housing.

Over the last few decades, the HDB has become the dominant housing provider, accounting for the homes of 82 per cent of the population. Table 1 shows the key differences between the housing systems in four major cities, including Singapore. It provides a broad picture of the composition of public and private housing and the proportion of rental and ownership for each category.

Table 1 makes two key points: One, these cities differ from Singapore in that most of their housing is provided by the private sector. This is also the case in most countries.

Two, only Singapore has a significant proportion of ownership when it comes to public sector housing. In fact, public housing in London and Sydney is solely rental, while Hong Kong has 35 per cent public housing ownership as compared with more than 95 per cent here.

Clearly, housing systems in different countries are shaped by their respective history, economy and the cultural and social needs of their people. Each system has its own merits and limitations; what matters is whether it can offer decent and affordable housing. We assess these two criteria in terms of living space, ratio of income to housing price as well as housing options. Table 2 compares the population density, ratio of median housing price to median annual household income and the average living space per person in Singapore, Hong Kong and London.

Table 2 shows that it is not meaningful to rate housing systems based on one factor alone. Take population density, for example. While Singapore scores the highest of the three, much of Hong Kong’s land area is unbuildable because of the terrain, which means that the living space per person in the territory is less than half of that in Singapore. In fact, living space per person in Singapore compares favourably to that in London, where land supply is not a constraint.

In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.

As for housing options, some countries offer greater diversity. In London, for example, if a family is unable to buy or rent a good home from the open market, a range of affordable options is available, including public housing from the local authorities at a subsidised rent. There is also the possibility of buying a home through shared ownership, a part-buy, part-rent scheme from one of the independent, non-profit associations providing low-cost housing.

In Singapore, the HDB has diversified its housing types over the years through design, construction and technology. For example, besides the bulk of build-to-order flats, it also engages private developers to build public housing under the Design, Build and Sell Scheme.

While housing systems vary from country to country, what is important is the ease with which people can live in quality homes, defined as housing with water, sewerage and electricity.

In Singapore, all this – together with estate maintenance and neighbourhood amenities – has been achieved by the HDB over a relatively short history of 50 years.

Perhaps the success has also raised expectations. Each spike in house prices – fluctuations in prices will likely increase, given Singapore’s open economy and rapidly changing global economic climate – will heighten the anxiety of potential buyers, despite the empirical evidence that housing in Singapore is still very much affordable by any standard.

The writers are from the Department of Real Estate, National University of Singapore.

In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.

Source: Straits Times, 27 Feb 2010

LAST year was a paradox for Singapore’s economy – for the first time ever, the economy shrank but employment grew.

Economic growth for 2009 came in at -2 per cent after taking a beating from the global financial crisis but job numbers grew 1.3 per cent, the Ministry of Trade and Industry (MTI) said yesterday.

This was due to two factors – job support schemes such as Jobs Credit and the Skills Programme for Upgrading and Resilience, and the labour-intensive construction sector.

The sector added 13,000 jobs last year when employment was at its bleakest, thanks to civil engineering works and a boom in the private property market. This was in stark contrast to previous recessions, which usually coincided with a property bust.

Initial forecasts had tipped that jobs would take a tumble since employment typically lags two to three quarters behind economic growth.

When the recession began in the second quarter of 2008, total employment followed the formula by falling in the first quarter of last year.

But a sharp rebound began in the third quarter and by December, employment had pushed past pre-crisis levels.

‘Compared to previous recessions, the peak-to-trough decline in employment during the 2008/2009 recession was uncharacteristically small and the turnaround unusually fast,’ said MTI.

Even though previous recessions in 1984/1985 and 2001 were of the same duration or shorter, the declines in employment then stretched for more than two years and resulted in more than 135,000 and 79,900 jobs lost respectively, it said.

Employment has recovered faster here than in other developed economies such as the United States, Britain and Japan.

Source: Straits Times, 20 Feb 2010

DEVELOPERS will be bringing forward their property launches over the next few months to satisfy strong demand from homebuyers, said Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong yesterday.

But Mr Cheong, who was speaking at Redas’ spring festival lunch, warned that many developers are now facing depleting land banks following brisk home sales in recent months. Developers, he said, were surprised at the speed of the recovery in the property market.

Property groups including Allgreen Properties, CapitaLand, City Developments, Frasers Centrepoint, MCL Land and UOL Group are all looking to launch projects over the next few months.

‘Redas’ members are committed to fast track supply to satisfy demand to minimise excessive speculation in the property market,’ said Mr Cheong. ‘Hopefully when demand is satisfied, there will be less pressure for future anti-speculative measures.’

Property groups here appear to have shrugged off the measures introduced by the government last Friday to cool the market.

The government said that a seller’s stamp duty will be levied on those who buy a residential property and sell it within a year. Currently, stamp duty is levied only for the purchase of a property and not its sale. Also, the loan-to-value limit on housing loans will be lowered from 90 per cent to 80 per cent.

Developers said that while volumes might contract in the short term, demand for private homes is expected to hold up well this year. Sales of new private homes by developers rose to 1,476 units in January – three times as high as the previous month and the highest level since August last year.

‘Sentiment will initially see a knee-jerk reaction and be affected, but over time, people will realise … that the interest rate environment is still very low,’ said City Developments executive chairman Kwek Leng Beng at the group’s results briefing earlier in the day. ‘If you don’t buy today, by the time you want to buy, the prices could have gone up a lot more.’

City Developments group will roll out five projects with around 1,600 units this year – The Residences at W Singapore Sentosa Cove and one residential project each at Chestnut Avenue, Thomson Road, Pasir Ris and in the Dunearn Road area.

Other market players shared similar sentiments. Frasers Centrepoint CEO Lim Ee Seng believes that the most recent anti-speculation rules are unlikely to disturb the property market much.

Frasers Centrepoint will officially launch its 81-unit Residences Botanique along Sirat Road tomorrow. It also has two launches planned for Q2 – a 393-unit project on the former Flamingo Valley Site along Siglap Road and phase three of its Waterfront Collection along Bedok Reservoir.

The buzz in private home sales continued this week – even after the newest anti-speculation measures were announced.

At MCL Land’s preview of its Yishun condo The Estuary yesterday, most of the 200 units launched were snapped up at an average price of $750 per square foot. MCL Land will roll out another 120-150 units in the project over the coming weekend – with selective price increases – said chief executive Koh Teck Chuan.

‘So far, the impact (of the government measures) is not noticeable,’ said Mr Koh. But units and projects that are more popular with investors could see a drop-off in demand, he added. MCL Land will also preview its 65-unit D’Mira at Boon Teck Road in mid-March.

UOL Group also intends to launch two projects in April or May – a 616-unit development at Dakota Crescent and a 172-unit project on the former Rainbow Gardens site at Toh Tuck Road.

But depleting land banks were a concern, Mr Cheong said. Redas ‘is now looking forward to more sites in the confirmed list for developers to replenish their land banks’, he said.

‘We believe the long-term solution to a sustainable and stable market is still adequate supply,’ Mr Cheong noted.

One developer told BT that it is important for his counterparts and himself to have enough in their land banks. But ‘at the same time, we don’t want the government to flood the market and over-supply,’ he said.

He added: ‘The best thing for the government to do – which is something very difficult and I don’t envy them – is to try to sell just enough so that the market will not catch fire, and not sell too much so that the market will go under.’

Source: Business Times, 26 Feb 2010

PROPERTY developers say they are eager to bring forward project launches to ride the buoyant market but are being held back by their limited land bank.

They were caught by surprise at the rapid market recovery, they say.

‘Many of us are now caught with a depleting land bank,’ the Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong said.

‘We believe the long-term solution to a sustainable and stable market is still adequate supply,’ he added.

Credo Real Estate’s deputy managing director Tan Hong Boon summed up the mood: ‘You never know what will happen. While the going is still good, developers will want to launch quickly. This is particularly so for mass market projects.

The Government recently stepped up the supply of development sites after a lull, and believes supply is adequate.

Yesterday, a 3.02ha site at Hougang Avenue 2 was offered to developers. If interest is adequate, a tender will proceed.

Another reserve list site will be offered by May, on top of confirmed list sites, which are tendered without precondition.

The comments by Mr Cheong and Mr Tan at the Redas Chinese New Year lunch at Capella Singapore yesterday came a week after market cooling measures.

The Government imposed a duty sellers must pay if they sell within a year of purchase. It also capped bank loans at 80 per cent of a sale price, from 90 per cent.

Mr Cheong said developers want land supply fast-tracked to satisfy buyer demand to minimise speculation to ease the pressure for more anti-speculative steps.

‘Given the unexpected return of an active property market, developers over the next few months would also be actively bidding for more land,’ he said.

Redas members look forward to more confirmed list sites to replenish land banks, he said. They are looking to Government land, given limited sources of private land. A developer who declined to be named said private land owners were asking for the sky ’so we can’t buy’.

Mr Cheong said developers would rather have this problem than the bleak effects of last year’s meltdown in the banking system. ‘Managing upside is always easier than managing downside.’

The anti-speculative steps were a timely reminder, said Frasers Centrepoint chief executive Lim Ee Seng at the lunch. ‘Exceptional jumps in prices are not good for us.’ Still, he said: ‘No matter how high it gets, it will still obey the law of gravity.’

An anonymous developer said the measures had hurt sentiment a little. ‘If there are 100 buyers, maybe 10 will change their minds. I expect volume to moderate a bit.’

Still, so far the measures appear to have had little or no impact on recent sales. ‘The market is still hot,’ said an industry observer. The 608-unit The Estuary in Yishun, whose preview opened on Wednesday, has sold over 200 units.

The average price for the 99-year leasehold condo is $750 per sq ft, with units facing the Lower Seletar reservoir costing around $800 psf on average.

Separately, City Developments boss Kwek Leng Beng said at a results briefing for CDL yesterday that sentiment would remain strong among genuine buyers, despite the government measures.

Mr Cheong addressed guest of honour Finance Minister Tharman Shanmugaratnam, saying developers were disappointed at being left out of the Budget.

But they were happy at the productivity push given the long-term gains. Redas called this ‘a deferred payment hongbao’.

Looming launches include the 151-unit Seascape in Sentosa Cove and Cheung Kong Holdings’ 295-unit The Vision. Far East Organization and Frasers Centrepoint plan to release Waterfront Gold in Bedok Reservoir soon. Allgreen may launch RV Residences in River Valley and unsold units at Cascadia in Bukit Timah.

Source: Straits Times, 26 Feb 2010

Singapore’s first eco-business park is expected to create 20,000 jobs and draw some $2.5 billion worth of investments in buildings by its 2030 completion.

CleanTech Park (CTP) will be an ‘epi-centre’ for research, innovation and commercialisation of clean technology from both the public and private sectors, JTC Corporation and the Economic Development Board (EDB) said yesterday as they unveiled the masterplan for the 50-hectare Nanyang Avenue site.

A key initiative of the $1 billion Singapore Sustainable Blueprint announced last year, CleanTech Park is to be ‘emblematic of how businesses can achieve both economic vibrancy and environmental sustainability; function in harmony and nature,’ JTC chief executive Manohar Khiatani said.

At a macro level, CleanTech Park fleshes out the Economic Strategies Committee’s vision of Singapore as a ‘living lab’ for global companies to test-bed and commercialise green solutions, especially for urban and tropical settings. It will also be a significant leg-up for the cleantech industry which EDB sees as a key growth cluster and expects to contribute $3.4 billion to GDP and employ 18,000 people by 2015.

EDB deputy managing director Tan Choon Sian said: ‘We do believe that there will be strong interest from companies, with increased interest in eco- friendly spaces and environmental sustainability.’

CTP broadens the range of options that EDB can offer to the investors it seeks to bring into Singapore too, he said.

While it is a first for Asia, CTP offers a unique proposition even when compared to global parks of similar orientation, EDB director for cleantech Goh Chee Kiong said. ‘First, we have the full continuum of cleantech activities from upstream R&D to commercialisation and test-bedding. Second, we can develop and test-bed solutions for the tropical climate while most innovations are now developed in and for temperate climates,’ he said.

The first of CTP’s three phases of development over the next 20 years kicks off with infrastructural works in July. The park’s total infrastructure investment will be $52 million.

JTC intends to develop the site in an environmentally sustainable manner. Green strategies such as stormwater management, green walkways and sky trellises between buildings, solar panels, conservation zones and green construction methods will thus feature strongly.

By the end of Phase 1 in 2018, about 250 local and foreign SMEs and MNCs are expected to be housed on an initial 17 hectares of land within the park.

Other than pure-play cleantech firms, JTC also hopes to draw eco-friendly product and service sellers, or businesses with a strong green identity. Its first anchor tenant will be neighbouring Nanyang Technological University, which will help seed R&D activities at the park and is expected to catalyse collaborations between industry and academia. NTU already has tie-ups with companies such as Japanese water technology firm Toray.

Mr Khiatani stressed that while ecology and environmental sustainability is the park’s distinguishing mark, commercial viability remains key. The park’s one million square metres of space will thus be ‘priced competitively’, he said.

Colliers International industrial director Tan Boon Leong suggested that government agencies could lead the way to ’show that there are substantial benefits and savings to be had’, while CB Richard Ellis director of industrial and logistics services Bernard Goh thinks a premium of 10 to 20 per cent will be attractive though tax incentives may be needed if costs range 40-50 per cent above other business parks.

Industry players were excited about CTP’s potential to transform the young cleantech sector here.

Edwin Khew, chairman of the Sustainable Energy Association of Singapore which represents 140 companies, said: ‘This creates a centre of excellence, a very attractive place to generate business. Investors can meet tech providers, carbon management companies, project managers – all in a single place. ‘On top of that, our technologies can be test-bedded, showcased and demonstrated as entire systems in the park itself.’

Member companies are being encouraged to take out small offices in CTP.

Ron Mahabir, managing director of Asia Cleantech Capital, a private equity firm focused on cleantech, said that he would consider CTP for several companies in his firms’ portfolio such as Zeco Systems and Annex Power.

Source: Business Times, 26 Feb 2010

City Developments Ltd (CDL), which yesterday posted its second-highest full-year net profit, is getting ready for at least five Singapore residential property launches this year.

Fourth-quarter net earnings jumped 76.7 per cent year on year to $176.7 million on the back of strong contribution from property development. Pre-tax profit from this segment rose 107.2 per cent for the fourth quarter and 14.2 per cent for the full year.

As a result, property development accounted for 70.7 per cent of Q409 group pre-tax profit; for full-year 2009, its contribution came to 65.5 per cent.

For Q409, the group booked profits from Cliveden at Grange, The Arte, One Shenton, Shelford Suites, The Solitaire, Tribeca and Wilkie Studio. Profits were also booked from joint venture projects such as Livia and The Oceanfront @ Sentosa Cove.

The group also highlighted that profits from the Volari at Balmoral and Hundred Trees condos, which are nearly completely sold, have yet to be booked as these projects are in the early phase of construction. The same goes for The Gale, a joint venture project.

CDL is targeting to launch The Residences at W Singapore Sentosa Cove next month. In April, it hopes to release a 429-unit condo at Chestnut Avenue and a 158-unit condo on the former Concorde Residences site on Thomson Road, followed by a condo in Pasir Ris (next to Livia) in June. In July or August, the group plans to launch a condo with about 150 units on the Copthorne Orchid Hotel site in the Dunearn Road area, owned by its London-listed hotel arm Millennium & Copthorne Hotels (M&C). The projects will be launched in phases.

CDL executive chairman Kwek Leng Beng highlighted that two overseas hotels in M&C’s portfolio – Millennium Seoul Hilton and The Tara in Kensington, London – could also be redeveloped into condos at the right time.

CDL’s current landbank can potentially yield about 7.1 million square foot of gross floor area.

For the year ended Dec 31, 2009, group net profit edged up 2.1 per cent to $593.4 million, the second best showing since the group’s inception in 1963. Its best bottom line, of about $725 million, was achieved for FY2007. CDL’s latest full-year turnover of $3.27 billion (an 11.1 per cent increase from the preceding year) was its highest ever.

The group sold a total of 1,508 residential units with sales revenue of $1.87 billion (including joint venture share) last year – a marked jump from the 368 units sold for a total $348 million in 2008.

CDL generated about $1 billion cash from operating activities before tax last year (2008: $516.6 million) – a feat accomplished without resorting to any equity fund raising.

The group’s board is recommending a final ordinary dividend of eight cents per share, up from 7.5 cents per share for 2008.

The group is conserving some of its cash for acquisition possibilities, especially in the West, where attractively priced deals are available.

Looking ahead, CDL expects cashflow this year to be healthy as it has pre-sold residential developments and with quite a number of its projects likely to be completed this year – including The Solitaire (which has already received Temporary Occupation Permit), Tribeca, The Oceanfront @ Sentosa Cove, Wilkie Studio and The Arte.

CDL’s gearing ratio, without taking into account fair value gains on investment properties as is the group’s accounting practice, dipped from 48 per cent at end-2008 to 40 per cent at end-2009.

It it had taken into account such gains, its gearing ratio would have fallen from 32 per cent to 27 per cent over the same period. The group managed to trim net borrowings by 10 per cent last year to $3.05 billion and achieved lower average interest rate on borrowings of 2.2-2.5 per cent, compared with 2.6-3.7 per cent for 2008.

Its interest cover ratio also increased from 11 times for FY2008 to 14.5 times for FY2009.

Net asset value per share rose from $5.97 at end-2008 to $6.57 at end-2009.

During yesterday’s results briefing, Mr Kwek also questioned accounting conventions these days that allow companies to book upward revaluations on investment properties as profits as well as to recognise profit on exceptional items such as one-off divestments.

Core earnings, which are a business’ recurring income, should be focused on instead, he argues.

‘Why do you want to add in ‘exceptional profit’, or what we used to term as ‘extraordinary profit’ to your normal profit and say: ‘My goodness, I got very good profit; I should ask my board to give me a big bonus!’?’

Source: Business Times, 26 Feb 2010

YANLORD Land Group’s net profit dropped 16 per cent to $118.4 million for the fourth quarter ended Dec 31, 2009, as revenue and gross profit margins plummeted.

But for the full year, net profit jumped 44 per cent to $325.4 million as strong demand for its residential projects in the first nine months lifted sales and prices.

Q4 revenue dived 48 per cent year-on-year to $214.1 million with gross profit margin plunging 23.9 percentage points to 38.4 per cent due mainly to the change in product mix. Yanlord attributed this to a decline in gross floor area delivered and lower average selling prices (ASPs) because of lower proportion of high-margin projects sold compared to the fourth quarter of 2008.

Its revenue for the year surged 59 per cent to $1.6 billion as the gross floor area delivered rose 33.5 per cent while ASPs grew 13.7 per cent to 19,658 yuan per square metre (psm). Q4 earnings per share fell to 6.09 cents from 7.67 cents a year ago.

As at end-2009, the group’s total pre-contracted sales amounted to $1.2 billion.

Fair value loss on investment properties, however, widened to $120.69 million in 2009 from $81.22 million in 2008.

As at Dec 31, 2009, cash and bank balances were substantially higher at $1.36 billion, up from about $0.4 billion a year earlier. Yanlord attributed this to prudent financial policies and strong performance.

The group said its directors are confident of the company’s performance relative to the industry trend for the next reporting period and the next 12 months.

Yanlord has proposed a first and final dividend of 1.68 Singapore cents per share, representing a payout ratio of about 10 per cent.

Yanlord’s chairman and chief executive Zhong Sheng Jian said the group remains confident of the long-term prospects of China’s real estate sector despite near-term uncertainties arising from regulatory policies.

‘We will continue to focus on our business strategies and comparative advantages in the development of quality residential apartments in prime locations within high-growth PRC cities,’ he said.

Last December, the group obtained a three- year US$400 million term loan facility and will use this to refinance the outstanding amount of a US$200 million facility it obtained in 2007 and for general corporate purposes, including acquiring new land.

This year, the group has already launched new batches of apartment units in Yanlord Riverside Plaza (Phase 1) in Tianjin and Yanlord Riverside City (Phase 3) in Shanghai. These projects have recorded new highs in ASPs, rising 32.2 per cent to 53,033 yuan psm in Shanghai and 27.4 per cent to 23,241 yuan psm in Tianjin.

Yanlord said it will continue to launch new batches of its projects this quarter in Shanghai, Suzhou, Tianjin and Zhuhai.

Yanlord shares ended trading yesterday at $1.77, one cent down.

Source: Business Times, 26 Feb 2010