City Developments Quarterly Profit Rises 53% on Home SalesPooja Thakur
City Developments Ltd., Singapore’s second-largest developer, said fourth-quarter profit jumped 53 percent, boosted by its property development business.
Net income climbed to S$249.3 million ($201.5 million) in the three months ended Dec. 31, from S$163.2 million a year earlier, it said in Singapore exchange statement today. Sales gained 23 percent to S$886.4 million. For the full year, profit fell 15 percent to S$678.3 million, higher than the S$599 million mean estimate of 21 analyst surveyed by Bloomberg.
The Singapore government earlier this week announced plans to raise taxes for luxury homeowners and investment properties, widening a four-year campaign to curb speculation after prices in Asia’s second most expensive housing market rose to a record. It also introduced new measures last month that included an increase in the stamp duty for homebuyers by between 5 percentage points and 7 percentage points, with permanent residents paying taxes when they buy their first home.
“2013 remains unpredictable on the global economic front,” Chairman Kwek Leng Beng said in the statement. “The group has already established some growth platforms and will build upon them. We will focus on deriving more earnings from overseas growth engines.”
The company, which is the biggest shareholder of Millennium & Copthorne Hotels Plc, said its global hospitality operation was a key contributor to its earnings.
City Developments’s shares rose 0.4 percent to S$11.17 at the close of trading in Singapore, paring decline this year to 13 percent. The stock is the worst performer among 39 developers and REITs on the Singapore property index.
“The shares have already corrected a fair bit because of the earlier measures,” said Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte. “The market will be looking at the outlook.”
City Developments said it sold 428 units or 84 percent of its joint venture condominium project Echelon, located close to the city’s downtown. It booked earnings from sales at residential projects such as 368 Thomson and Buckley Classique that were sold earlier, and said it has “limited” inventory.
Singapore’s home sales rose 43 percent in January from the previous month as buyers rushed to purchase homes right after the government announced cooling measures. Sales increased to 2,013 units from 1,410 units in December, according to data released by the Urban Redevelopment Authority. Sales reached a record 22,699 units in 2012, according to Bloomberg calculation based on the government data, which dates back to 1996.
The company said it expects “some headwind” for the residential market as investment sentiment in the luxury segment may be affected by the curbs. Buying interest in the so-called mass market projects may be “moderated” over the next few months, it said.
For its office buildings, the occupancy rate of 94.5 percent was higher than the national average of 90.6 percent, it said.
City Developments opened its 240-room W Singapore Sentosa Cove hotel on Oct. 20. The developer also won a joint bid by its unit, Intrepid Investments Pte and Hong Realty Pvt. to develop a residential plot at Commonwealth Avenue. The joint venture company paid S$562.8 million for the site, it said in a statement earlier this month.
The hotel segment will be a “steady income generator” for the group, it said, adding that it expects to remain profitable in 2013.