CDL has faith in luxury property sector

Straits Times: Thu, Mar 01

THE luxury property market has been sluggish in the past few months but developer City Developments (CDL) believes it will have its day in the sun again. The new cooling measures have hit foreign buyers, who have been traditionally keen on high-end homes. The subdued sentiment has forced CDL to halt marketing its premium project The Residences at W Singapore Sentosa Cove. CDL director and executive chairman Kwek Leng Beng told a results briefing yesterday that the additional buyer's stamp duty measure introduced last December was aimed at preventing a property bubble and was not designed to crash the property market. He added that the Government will likely review its various property measures if necessary: 'The effect of the medicine cannot result in a cure overnight. It has to take time.' He also said he is not worried about the health of the high-end sector because most developers have strong balance sheets and can afford to hold on and sell when better times return. 'There's also a business model that some of (the developers) may be starting to think about... we don't want to sell but keep it and get rental income... One day, the property will appreciate a lot,' noted Mr Kwek. CDL is equally optimistic about China. It already has three sites there and an additional $500 million has been allocated to the CDL China subsidiary for acquisition opportunities. Mr Sherman Kwek, CDL China's chief executive, noted that property cooling measures in China have enabled the group to find opportunities by tendering for prime sites at reasonable prices. 'Sometimes on the right day at the right time, when other people are not paying attention, then you might be able to snag a prime site. 'That's how we managed to get the (Suzhou Jinji Lake site) for 3,000 yuan (S$600) psm ppr. So sometimes it depends on your luck, depends on the market,' he said. CDL reported a 32.2 per cent drop in fourth-quarter net profit to $163.2 million due to the absence of several one-off gains made in 2010. Revenue for the three months to Dec 31 improved 7.4 per cent to $721.5 million. Profit for the full year rose 1.9 per cent, from $784 million to $798.6 million, while revenue was up 5.7 per cent to $3.28 billion. Quarterly earnings per share fell 33.3 per cent to 17.2 cents but full-year earnings per share climbed slightly to 86.4 cents. Net asset value per share rose from $6.89 to $7.51. A dividend of 13 cents per share, which includes a special final dividend, has been declared. [e-mail] WAIT FOR BETTER TIMES 'There's also a business model that some of (the developers) may be starting to think about... we don't want to sell but keep it and get rental income... One day, the property will appreciate a lot.' CDL director and executive chairman Kwek Leng Beng, who highlighted that he is not worried about the health of the high-end sector because most developers have strong balance sheets and can afford to hold on and sell when better times return. Source: The Straits Times