City Developments Profit Rises 18% on Singapore Demand for Homes, Offices

By Shiyin Chen - Aug 12, 2010 11:41 AM GMT+0800
City Developments Ltd., Singapore’s second-largest property company, posted an 18 percent increase in second-quarter profit as the city-state’s economic recovery boosted demand for homes and office space.


Net income for the three months ended June 30 rose to S$164.6 million ($120 million), or 17.2 cents a share, from S$140 million, or 14.7 cents, a year earlier, the company said in a statement to the Singapore stock exchange. Revenue climbed 20 percent to S$941.7 million.

Singapore’s economy expanded 24 percent in the second quarter and growth for the full year may reach as much as 15 percent, according to government estimates. Home prices climbed 5.3 percent during the three months ended June, a fourth consecutive quarterly increase.

“The rapid economic expansion that Singapore is experiencing should help sustain market confidence, and the encouraging showing in residential sales volume during the second quarter is likely to remain in a reasonably buoyant condition over the next few months,” City Developments said in the statement.

City Developments fell 2.2 percent to S$11.66 as of 11:32 a.m. in Singapore trading, falling for a seventh straight day, the longest losing streak since May. The drop trimmed its gain this year to 0.9 percent. The benchmark Straits Times Index has climbed 0.8 percent during the period.

Singapore Measures

Chairman Kwek Leng Beng said in a briefing today he doesn’t expect the Singapore government to take further steps to cool the property markets, noting that local developers have slowed the bidding for land. 2011 may be a better time to market luxury homes, he said.

Revenue from the property development business grew 29 percent to S$444.19 million, the biggest contributor to overall sales. Its hotel operations, rental properties and other business units also reported higher revenue. The company owns a majority stake in Millennium & Copthorne Hotels Plc, an operator of more than 120 properties worldwide that last week reported a 56 percent increase in second-quarter profit.

City Developments said it plans to start sales at two residential projects in Singapore over the next few months amid “continuing healthy demand.” It agreed to sell all the units it owns in Chinatown Point, a commercial building in downtown Singapore, for S$250 million, the developer said.

China Expansion

City Developments also sees “opportunities” in China amid an easing in property prices and sales, according to the statement. It appointed Sherman Kwek as chief executive officer of CDL China Ltd. and will set aside S$300 million in investment funds for expansion in the country.

Prices in 70 major cities across China climbed 10.3 percent in July from a year earlier, the slowest pace in six months, the statistics bureau’s newspaper, China Information News, reported on Aug. 10.

“With the regulatory tightening of China’s property market, the time may be ripe soon for the group to pick up valuable land bank and/or investment properties at the right price,” the company said in the statement.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net