City Developments’ Q2 profit falls 15.3% on-year to S$139.9m

City Developments Limited (CDL) has become the latest property heavyweight to give a bullish outlook for the property sector. Executive chairman Kwek Leng Beng said on Thursday the recent strong home sales momentum is sustainable.

The comment came as CDL booked a 15 per cent drop on-year in second quarter earnings to S$139.9 million – its fifth straight quarter of decline. Revenue, meanwhile, rose by less than 1 per cent to S$787 million.

Mr Kwek said: “If you read our first half results, we made a statement saying the market was recovering. But even I myself who believed in that didn’t expect the market to recover so fast. But it did recover. So my view is that unless something drastic happens again, the market is moving and recovering.”

CDL believes that the strong residential sales momentum is sustainable and the outlook is promising. As a group, it sold about 500 units between January and June, and the pace of sales has picked up strongly since then, with sales to date doubling at more than 1,000 units.

Singapore’s private property market has been buoyant, with more than 7,200 units sold in the first half of this year. This compares to just over 4,200 units sold in the entire 2008.

Going forward, CDL said the opening of Singapore’s two integrated resorts will give the industry a boost.

“The two IRs are going to generate many different types of customers – some of them will want to buy housing units. We have been approached by the two integrated resorts… They think they may not have enough rooms over the weekends, so they are tying up with us.

“Not all people would want to stay in the hotel. You may want to go to the hotel to try your luck once a week or to see a show, but that doesn’t mean you cannot have a second home here,” said Mr Kwek.

He noted that Macau’s residential market has “gone through the roof” after casinos started operating.

CDL plans to launch a few projects in the second half of this year, including one in West Coast and another at the former Thomson Mansion site. It could also launch a residential development at the Quayside Isle Collection at Sentosa Cove.

Source : Channel NewsAsia – 13 Aug 2009

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