Net income rises to $164.6m as economic recovery boosts demand for homes, office space

CITY Developments Limited (CDL), Singapore’s second-largest property company, posted an 18 per cent increase in second-quarter net profit as economic recovery boosted demand for its homes and office space.

Net income for the three months ended June 30 rose to $164.6 million from $140 million a year earlier.

Earnings per share rose to 17.4 cents from 14.7 cents.

The group’s revenue climbed 20 per cent to $941.7 million from $787.1 million in Q2 2009.

Analysts said that the results were largely in line with expectations.

Including the Q1 net profit, net profit for the first six months of 2010 came to $304 million – up 36 per cent from $223.1 million in H1 2009.

‘This is equivalent to 47 per cent of consensus estimates of $642 million and 49 per cent of our estimate of $623 million for the 2010 financial year,’ wrote Citigroup analyst Wendy Koh in a note.

Revenue for the first half of 2010 rose 20 per cent to $1.7 billion from $1.4 billion a year ago as CDL sold a total of 773 units with a sales value of $950 million in H1 2010.

Year-to-date, the company has sold 934 units with sales value of $1.2 billion.

In comparison, in H1 2009, the group sold 537 units worth $665 million.

The group’s property development segment was the lead performer, contributing more than 50 per cent to profit before tax for both Q2 and H1 in 2010.

The rental properties segment continued to be the second largest contributor for H1 2010 due to the gains recognised on the disposal of North Bridge Commercial Complex and The Office Chamber in Q1 and Q2 2010 respectively.

However, for Q2, the recovery of the hospitality market (particularly in Asia) pushed CDL’s hotel operations into becoming the second in line in terms of profit contribution.

CDL has two new launches planned for Q3. The first is the 642-unit NV Residences at Pasir Ris.

The second project is the redevelopment of the existing Copthorne Orchid Hotel site along Dunearn Road, which the group is managing the marketing on behalf of its hotel arm Millennium & Copthorne Hotels (M&C), in which it has a 54 per cent interest.

The upcoming project on the site will have 150 units.

CDL shares gained 8 cents to close at $12 yesterday.

Source: Business Times, 13 Aug 2010

 (SINGAPORE) City Developments Limited (CDL), which now gets most of its income from Singapore, has set up a new unit with some $300 million on hand to build up its presence in China.

The fully-owned subsidiary, CDL China Limited, will target all segments of China’s property market – the high-end, mid-tier and mass market residential markets as well as the commercial and hospitality sectors. So far, 12 first-tier and second-tier cities in China have been earmarked for investment.

The group yesterday reported an 18 per cent increase in second quarter net profit as economic recovery boosted demand for its homes and office space in Singapore. But CDL is looking at diversifying its sources of income geographically.

While the group’s focus will remain firmly rooted in Singapore – where it knows the environment best and serves as a proxy to the Singapore real estate market – China cannot be ignored, said executive chairman Kwek Leng Beng.

His elder son Sherman Kwek, who has been appointed chief executive of CDL China, admitted yesterday that the group has to play ‘catch up’ with other developers – such as CapitaLand – which had entered the China market earlier. But ‘this is the right time for a new market entrant to enter (China),’ he said.

With the Chinese government’s recent measures to control its over-heated property market, CDL believes that the time may soon be ripe to pick up land and/or investment properties at the right price.

Prices in 70 major cities across China climbed 10.3 per cent in July from a year earlier (the slowest pace in six months) the statistics bureau reported earlier this week.

The younger Mr Kwek said that CDL China’s preferred mode of investment will be to buy land directly from the government and then develop it on its own. But the unit will remain open to working with other developers in the form of joint ventures.

Right now, CDL China has just one major asset – the 36-storey office building Tianjin City Tower – in China. But this excludes assets held under CDL’s London-listed hotel arm Millennium & Copthorne Hotels (M&C), which the group has a 54 per cent stake in.

While CDL China’s $300 million worth of initial investment funds is not large, the move is significant as it shows CDL’s new determination to venture into China, analysts said. The group has not shown such strong interest in China before.

‘While the initial capital is negligible compared to CDL’s total net assets of $7.8 billion, the shift in strategy and attitude is significant as CDL’s overseas presence (excluding hotel operations) is fairly limited today,’ said OCBC Investment Research analyst Meenal Kumar.

DMG & Partners Research analyst Brandon Lee said that initial progress is expected to be tepid, with earnings contribution only in the medium-long term.

The move is also an example of CDL’s more proactive stance of late to provide a growth story for shareholders.

‘(CDL’s) management has been actively unlocking value from its older commercial buildings and is now looking to expand in China,’ said Deutsche Bank analyst Gregory Lui.

The developer recently sold its stake in Chinatown Point (the entire retail component of 283 strata shop units as well as four strata office units) for $250 million.

The elder Mr Kwek yesterday said that more such older buildings could be sold as CDL seeks to capitalise on current demand.

Source: Business Times, 13 Aug 2010

But consultants warn that the buying drive may not be sustainable

STRIKING while the iron is hot, more developers – big and small – are riding on buying momentum to relaunch or spur interest in their properties.

Hoi Hup Realty has soft-launched the freehold Shelford 23 in the Bukit Timah area. Of the project’s 33 apartments, close to half have been sold at an average price of $1,250 per square foot (psf).
Buyers can opt for an interest absorption scheme at no extra cost, Hoi Hup told BT. The project is expected to receive a Temporary Occupation Permit (TOP) in 2012.

Hoi Hup opened Shelford 23′s showflat for preview in September last year but later closed it. The average launch price then was $1,400 psf. Based on Urban Redevelopment Authority (URA) data, no units had been taken up by April this year.

Preparations to launch the freehold Holland Residences near Holland Village also appear to be under way. The development, by Allgreen Properties, comprises three five-storey blocks with a total of 83 units. It is due to obtain TOP in a few years. BT understands that private previews may start from end-June and that agents are currently ascertaining interest.

Similarly, the freehold Nathan Residences in the River Valley area may soon be back on the market. Indicative asking prices appear to start from $1,200 psf. According to URA data, developer Tat Aik Property launched the 91-unit freehold project in September last year but nothing had been sold by April this year.

Projects in the east are also getting in on the action. Private previews of Oasis@Elias in the Pasir Ris area could start in the next few weeks. BT understands that launch prices could be in the range of $600 psf. The 99-year leasehold Chip Eng Seng development has 388 units.

Meanwhile, marketing of the 26-unit Spring@Langsat near the Eunos MRT station began last Friday night.

Over in the west, City Developments (CDL) said last Friday that it is accelerating plans to launch a project at the former Hong Leong Garden Condominium.

Sentiment in the residential property sector has improved in the past few months. And brisk sales recently have encouraged more developers to try their luck.

Evan Lim & Co said last Friday that it sold the last 44 units at Parc Centennial after a relaunch some two weeks ago. And CDL said that its Botannia is fully sold, with the 33 remaining units having been taken up in the past few weeks.

Despite the activity, some property consultants warned that the buying momentum may not be sustainable until there are clear signs of a global economic recovery.

Source: Business Times, 2 June 2009

This takes total sales since the official launch to 170 units

CITY Developments Ltd (CDL) sold 20 units at The Arte at Thomson over the weekend. This takes total sales since the property’s official launch to 170 units, with last weekend’s sales fetching a total of $30 million.

‘The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment. This reinforces CDL’s view that the current market is now attracting savvy but cautious investors,’ said Chia Ngiang Hong, Group general manager of CDL.A majority of buyers of The Arte have private home addresses and many say they want to invest in another property or to move into a new and upscale residence.

Singaporeans’ renewed interest in private property saw the sales of 2,660 private homes in the first three months of 2009, which is about 62 per cent of total new home sales in 2008, according to the CDL release.

Source: Business Times, 21 April 2009

Buyers’ interest was also evidenced by the strong turnover of over 1,000 visitors at The Arte’s showroom over the weekend.

Among other factors, these prospective buyers were drawn by the property’s location and proximity to a MRT station, according to a CDL release.

The Arte is located within the Thomson area with convenient connections to the City and the expressways. It is also a short walk from Toa Payoh MRT station.

Priced at $880 psf on average, the freehold project comprises two 36-storey towers and will be completed in 2012. Most of the 336 units available are going for under $2 million.

Buyers can opt for CDL’s interest absorption scheme (IAS), which allows them to defer the bulk of their purchase until The Arte’s completion on the condition that they take up a housing loan at the point of sale.

Condo-style flats popular; private homes see encouraging sales

THOUSANDS of people flocked to check out some of the new housing developments on sale over the weekend, scenes more reminiscent of a boom, not a recession.

As one industry watcher told The Straits Times: ‘The mass market is still moving. If you price it correctly and reasonably, people will still buy.’

The hottest ticket in town was clearly the Parc Lumiere project, which drew an astonishing 6,500 visitors over the weekend.

Buyers had begun queueing last Friday before its viewing period started on Saturday, with 829 people eventually in the line for flats in the estate, which is being developed under the Design, Build and Sell Scheme (DBSS).

There was no balloting for the project: Just turn up and book.

Developer Sim Lian Group said it has already sold 306 units out of a total of 360. All the four-room flats, priced between $378,000 and $425,000, have been sold.

Only the low-floor five-room flats are left. The five-roomers are priced from $462,000 to $575,000.
‘After going through Premiere @ Tampines, we thought we would try another way of selling. When you do it by ballot, a lot of people just try for fun. A lot who were keen didn’t get the chance to book,’ said Sim Lian executive director Diana Kuik.

But some potential buyers felt the walk-in selection sale method, essentially a first-come, first-served sale, was inconvenient. One said the sale came at too short a notice for him to take leave to queue. A parent said her son had been waiting for the project but was travelling in Europe.

Sim Lian said it has had feedback from happy buyers, including a pair of siblings happy to get a unit next to each other.

The second DBSS project, The Peak @ Toa Payoh, also had a busy weekend with 1,711 applications lodged as of 6pm yesterday for the 1,203 units.

This project by developer Hoi Hup Sunway is being sold by ballot, with applications open until next Tuesday.

About 22,500 people had visited the showflat from last Wednesday until it closed yesterday, said Ms Kellie Liew, executive director of projects at HSR Property Group, the marketing agent for The Peak. More than half of the applicants are interested in the five-room flats, with about 30 per cent looking at the four-roomers, she said.

In the private home market, the freehold The Arte in Jalan Datoh attracted about 1,000 people over the weekend, said developer City Developments (CDL).

The average price at the 336-unit project – which boasts relatively large flats – is $880 psf, with most units going for under $2 million each.

CDL said it sold another 20 units over the weekend for $30 million, bringing total sales to 170.
‘The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment,’ said CDL group general manager Chia Ngiang Hong.

‘This reinforces CDL’s view that the current market is now attracting savvy but cautious investors.’
A large number of buyers have private home addresses, he said, with many saying they want to invest in another property or to move into a ‘new and upscale residence’. CDL said it has extended the interest absorption scheme to these buyers.

Two other large projects that were launched last month also saw encouraging sales.

A further 22 apartments were sold at the 457-unit Mi Casa condominium in Choa Chu Kang in the past week, bringing total sales to 202 units. Prices hovered around $635 psf.

More than half of the 646 units at Double Bay Residences in Simei have been sold. This was the best-selling project last month, with 264 units being bought.

About 60 per cent of the 68-unit Verdure in Holland Roadhas also been sold since its preview more than a week ago.

Source: Straits Times, 21 April 2009

CDL offers Valentine’s Day discount for Pasir Ris project

AT a time when consumers think twice before forking out money for big-ticket items, a major property developer here is dangling outright discounts to lure buyers. And if customers do bite, the move may mark the start of a price war, say industry observers.

Yesterday, Mainboard-listed City Developments Limited (CDL) fired the first salvo by revealing a 5-per-cent discount for selected units at Livia, a mass-market condominium in Pasir Ris.

Source: Today – 13 Feb 2009

The announcement was decibels louder than usual: Up until now, developers have largely offered discounts to walk-in customers, rather than publicly trumpeting the promotions. CDL is expected to be taking out advertisements for its special offer over the next few days.

The occasion for the promotion? Valentine’s Day tomorrow, according to CDL’s press release obtained by Today.

Cupid, however, is not going to be the clincher for customers, said Colliers International’s research and consultancy director Tay Huey Ying. It’s the “pretty attractive pricing”, she said.

Livia’s special price is about $620 per square foot (psf), said CDL, versus the average of $650psf during the phase-one launch in July last year when 340 of the 360 units released were sold. This equates to a discount of 5 per cent.

CDL “senses a renewal of market interest and improvement in buyer sentiment”, said group general manager Chia Ngiang Hong.

Although CDL said it would apply the offer to just 30 units of the 99-year leasehold project, the reality is likely to see some 60 units let go at that price, a marketing agent said, on condition of anonymity.

That is a small number compared to the 384 units still unsold. But observers say the V-Day offer may be a starting point, to test if the price is “right”. Said an industry insider: “People have been coming to showflats and just nibbling. Singaporeans want to see prices move.”

A three-bedroom unit at Livia will now cost $752,000, CDL said, versus the phase-one price of $793,000.

How long will the special offer last?

“A limited period,” CDL said.

Could this spark a price war? CDL’s competitors declined comment yesterday.

Colliers’ Ms Tay said developers were likely to resort to cutting prices — and hence eroding their profit margins — “only for projects that they’re keen to move in order to ease cash flow”.

It’s more likely that developers will roll out “a combination of competitive pricing and innovative marketing strategies”, said Ms Tay.

Demand, however, is certainly there. Crowds yesterday thronged Alexis, a freehold condominium near Queenstown MRT station, during the first day of its launch. By evening, more than half of the 293-unit project was sold, developer EC Prime told Today.

Agents there dangled a big sweetener: Discounts of as high as 28 per cent, resulting in prices between $850 and $1,150psf.

While there were interested owner-occupiers, some people were overheard asking: “What are my chances of flipping this?”

Last week, Frasers Centrepoint sold 300 units of the 712-unit Caspian project in Jurong West within the first three days for an average of $580 psf. Most of the buyers were Singaporean HDB upgraders.