CDL's Gain Up 31% In Quiet Market

Source : The Straits Times, May 15 2008

Firm notches $165m in profits but sees weaker times ahead

DESPITE the subdued residential property market, Singapore developer City Developments (CDL) still notched up a 31 per cent growth in first-quarter net profit to $164.97 million.

It has held back launches here given the quiet market.

NOT READY: CDL is holding back launches of Shelford Suites (above), The Arte @ Thomson, Pasir Ris Phase 1 and The Quayside @ Sentosa. -- PHOTO: CDL

Revenue in the three months ended March 31, however, fell 1.3 per cent to $758.75 million.

CDL sees weaker times ahead. Property market sentiment may remain subdued in the next 12 months with problems linked to the United States sub- prime crisis still looming and given the expected credit tightening by some financial institutions, it said.

But the current uncertainty is a 'temporary environment' and Singapore's nimbleness in responding to economic changes will provide the Republic with the resilience to cope, it added.

'While there are currently less forthcoming individual property buyers, the group notes that foreign funds from Europe, US, Korea and China are migrating their focus to Asia,' it said. And Singapore is one of the key markets they are keen on, it added.

Nevertheless, for now, the group is still holding back launches of its Shelford Suites, The Arte @ Thomson, Pasir Ris Phase 1 and The Quayside @ Sentosa.

First-quarter profits, CDL said, were recognised from projects such as City Square Residences and One Shenton, as well as joint-venture projects such as The Sail @ Marina Bay, St Regis Residences and Parc Emily.

The group has profits yet to be recognised from residential developments sold over the last three years that are still being built.

CDL also benefited from the strong office market, even though rent increases have moderated to 7.8 per cent in the first quarter, from 10.9 per cent in the previous quarter.

Office leasing, it said, should remain strong with upward adjustment of existing rentals to a higher level when the existing leases are up for renewal.

In the hotel sector, CDL - which has a 53 per cent interest in Millennium and Copthorne Hotels - said it was too early to tell whether the slowdown in the US economy and current credit crunch will hit it.

First-quarter earnings per share were 18.1 cents, up from 13.9 cents, while net asset value per share was $5.84 as at March 31, up from $5.72 as at Dec 31.