CDL looks to diversify its assets beyond Singapore

With an expected slowdown in the property market at home, homegrown developer City Developments (CDL) is now looking to diversify more of its assets beyond Singapore.

While CDL’s mid-priced condominiums like those at the Echelon in Alexandra should continue to see demand, the same cannot be said for its high end properties.

And to push sales in this segment, CDL said it is coming up with new strategies but it is keeping tight lipped on details about the sales strategies.

Given its strong financial position, CDL is able to hold back from launching new high-end projects till market sentiment improves.

The company also has an added advantage as the land that it acquired for high-end properties were bought at lower prices.

CDL’s executive chairman Kwek Leng Beng, said: “Sentosa has no more land for development. Even if demand is so small, my cost is actually based on 2006. If you take into account 2006 and today’s price, how good it is to be able to enjoy such a low price, I keep it.”

The company recently reported that its revenue reached S$3.3 billion, the highest in its 50-year history.

It booked a 53 per cent on year rise in fourth quarter net profit to S$249.35 million while revenue was up 22.8 per cent in the same quarter to S$886.37 million.

However for the full year, net profit fell by 15.1 per cent to S$678 million due to one-off gains made in 2011.

Property development made up 49 per cent of pretax profits while hotel operations made up another 26 per cent.

Property development and hotel operations continued to be the lead contributors to CDL’s earnings. Looking ahead, the group will also be gradually diversifying property investments and look beyond Singapore for more opportunities.

Wilson Liew, investment analyst at Maybank-Kim Eng, said: “Global headwinds will come from their hotel operations, especially in the second half. From the new numbers, some of the gateway cities have experienced a decline in terms of RevPAR (revenue per available room). So we expect that to be a big part of the hotel story for this year.”

One area which CDL may expand into is in the Iskandar region in Johor Bahru.

Mr Kwek said that may take some time as Iskandar, three times the size of Singapore, is only 20 per cent developed.

Mr Kwek said: “Many of you have you have forgotten that CDL in the old days still has some land within the Iskandar Region which were held at a dirt cheap price you can never dream of buying today. We are looking into this. I want Iskandar to be more developed before I capitalize on this land.

To commemorate its 50 year anniversary, CDL proposed a special ordinary dividend of five cents on top of the ordinary dividend of eight cents per share.

This brings total dividend for 2012 to 13 cents a share.

Source : Channel NewsAsia – 28 Feb 2013

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