City Developments 4th-Quarter Profit Falls on Property Curbs

City Developments Ltd. (CIT), Singapore’s second-largest developer, posted an 11 percent drop in fourth-quarter profit on lower sales and said it faces continued challenges in its home market.

Net income fell to S$221 million ($174 million) in the three months ended Dec. 31, from S$249.3 million a year earlier, as sales decline 13 percent to S$774 million, the developer said in a statement to the Singapore exchange today. The lower sales was in part due to the absence of a similar gain from the disposal of industrial land parcels in the fourth-quarter of 2012, it said.

City Developments, which hired Grant Kelley from Leon Black’s Apollo Global Management LLC as chief executive officer, is seeking to expand abroad as developers face the lowest total homes sales in the country in four years following the government’s tougher housing curbs to cool record prices.

“I expect City Developments to bolster its overseas business,” Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore, said in an e-mailed statement. “The operating landscape for developers has become challenging as competitive land bids amidst slowing residential demand is eroding developers’ margins.”

City Developments shares added 0.2 percent to S$9.34 at the close of trading in Singapore, trimming its loss this year to 2.7 percent. The benchmark Straits Times Index gained 0.3 percent today and has declined 2.2 percent this year.

‘Macro Headwinds’

Singapore’s fourth-quarter home prices slid for the first time in almost two years, trimming annual gains to the smallest since 2008 as mortgage curbs cooled prices in the Southeast Asian city.

“Macro headwinds are expected to continue to weigh on the domestic property market,” the company said in the statement. It reiterated that it is “hopeful that some of the cooling measures could be tweaked in due course, particularly in the area of foreign investment.”

Housing values gained 1.1 percent in 2013, the smallest annual increase since prices slid 4.7 percent in 2008. Private home sales fell to 14,948 units last year from 22,197 in 2012, the data showed. Resale transactions of homes dropped by half to 6,608 units from 13,214 in 2012. Home sales slid in January, marking the slowest start to the year since 2009, the Authority said on Feb. 17.

Singapore’s central bank said in June that home loans should not exceed a total debt-servicing ratio of 60 percent as it sought to limit borrowers exceeding their capacity to service loans.

To contact the reporters on this story: Klaus Wille in Singapore at kwille@bloomberg.net; Pooja Thakur in Singapore at pthakur@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.