Friday, August 15, 2008

City Developments Posts 3% Rise In H1 Net Profit To S$330m

Source : Channel NewsAsia, 14 August 2008

Singapore property developer City Developments remains positive about its outlook - despite the global economic slowdown.

It has booked a 3 per cent increase in first-half earnings to S$330.1 million, and announced plans for a S$1 billion Islamic bond sale to boost its war chest.

The hotel business is one bright spark for City Developments. It is the second biggest contributor to the company's pre-tax profits.

According to City Developments, its average revenue per available room in Singapore jumped by 33 per cent in the first half this year, compared to a year ago.

This is expected to come down a little due to slowing visitor arrivals and the global economic slowdown. However, City Developments has reasons to stay positive.

Kwek Leng Beng, executive chairman, City Developments, said: "I think, certainly, pricing power has been reduced considerably. With the financial woes around the world, especially for financial institutions, they are not going to pay high prices to stay in a hotel.

"So the majority of our hotels are four-star, so we have the benefit. If you can't stay in a five-star (hotel), you go to the next level."

The group noted that the global economy's slowdown has affected the Singapore property market, but it believes that longer term fundamentals remain strong.

It is still looking for the best time to launch its two luxury residential projects in the second half of this year.

Outside Singapore, City Developments is looking at emerging markets like Vietnam, where inflation and interest rates are coming off their highs.

Mr Kwek said: "When it comes down... normally it will come down a little first. Then you will have fire sales, that's the right time to buy. We have all the options - buy a completed building, which is not many to come buy, or raw land to build, or buy a hotel but that's not many."

City Developments has operations across the globe, including China, Thailand and the UK. - CNA/ms

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