City Developments Third-Quarter Profit Falls 10% on Lower Sales

City Developments Ltd. (CIT), Singapore’s second-largest developer, said third-quarter profit fell 10 percent on lower sales after the government introduced new property curbs.

Net income declined to S$120.6 million ($96 million) in the three months ended Sept. 30, from S$134.5 million a year earlier, it said in a Singapore exchange statement today. Sales shrunk 1.2 percent to S$822.7 million.

City Developments joins CapitaLand Ltd. in posting declining profits as home prices in the island-state had the slowest growth in six quarters in the three months ended Sept. 30 after the government took additional steps to cool prices in June. The city’s home sales also fell 52 percent in September from a year ago, signaling that the curbs are working.

“The impacts of the accumulated property cooling measures are beginning to show its true colors and bite,” the company said in the statement today.

Developers are beginning to cut prices in existing and new projects and take lower profit margins, the company said.

“Land prices continue to escalate due to limited land bank,” it said. “The group continues to be selective and strategic in its land replenishment strategy. It has remained more conservative in tendering for land this year, preferring to err on caution.”

City Developments sold 376 residential units of its 380 apartment Lush Acres executive condominium project in the northeast of the island-state, the developer said today.

D’Nest, a 912-unit condominium located at Pasir Ris Grove is 93 percent, sold while Bartley Ridge, an 868-unit joint venture development located at Bartley Road, was 85 percent sold, the company said

More Curbs

The company’s shares rose 0.1 percent to S$10.08 at the close of trading in Singapore today, before the results were released. The stock has declined about 21 percent this year, making it the worst performer on the Singapore property index.

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.

Last month, CapitaLand, Southeast Asia’s biggest developer, reported third-quarter profit fell 8.7 percent to S$135.5 million from a year earlier on lower gains from investment property sales.

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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