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CapitaLand Quarterly Profit Falls on Lower Portfolio Gains

CapitaLand Ltd. (CAPL), Southeast Asia’s biggest developer, said third-quarter profit fell 8.7 percent on lower gains from investment property sales, sending the shares to their biggest drop in four weeks.

Net income declined to S$135.5 million ($109 million) in the three months ended Sept. 30, from S$148.5 million a year earlier, the Singapore-based developer said in a stock exchange statement today. Sales rose 53 percent to S$1.05 billion. Portfolio gains, which were mainly from the divestment of CapitaLand’s stake in three U.K. properties, dropped 79 percent to S$15.7 million, the company said.

Prices and transaction volumes of Singapore residential properties are expected to moderate for the rest of the year due to the cumulative impact of government property measures, the developer said in the statement. Home prices in the island-state had the slowest growth in six quarters in the three months ended Sept. 30 after the government acted to cool prices. Home sales also fell 52 percent in September from a year ago, signaling that the government curbs are working.

“In the near term, the Singapore cooling measures will impact sales at developers,” Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore, said in a telephone interview today.

Stock Drops

Excluding the impact of portfolio and revaluation gains, the core nine-month operating profit of S$343.1 million is below expectations, accounting for 48 percent of UOB’s full-year forecast of S$717 million, according to a note from the brokerage after the earnings.

CapitaLand shares dropped 1.3 percent to S$3.12 at the close of Singapore trading, the biggest decline since Oct. 3.

CapitaLand sold 468 residential units in the island state in the quarter, while its China business sold 707 units, the developer said today. Its two core markets of Singapore and China accounted for 77 percent of the group’s profit before interest and tax as of Sept. 30, the company said.

Record home prices amid low interest rates raised concerns of a housing bubble and prompted the Singapore government to widen a campaign that started in 2009 to curb speculation in the property market. The city unveiled new rules in June governing how financial institutions grant property loans to individuals, in addition to previous curbs including new taxes and higher down-payments.

The developer may alter the size of its apartments as it seeks to improve affordability to combat government measures, Lim Ming Yan, president and chief executive officer at CapitaLand, said in a Bloomberg Television interview on July 25.

CapitaLand started marketing its Sky Vue project, about 15 kilometers (9.3 miles) away from the central business district, selling 433 of 505 units marketed, it said today. It will continue to bid for land sites in well-located areas, the developer said.

To contact the reporter on this story: Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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