Singapore Property Curbs to Stay in 2017, CapitaLand Says

Updated on
  • Residential market close to bottom, price declines have slowed
  • China-U.S. relationship important for business environment

Here's Why CapitaLand's 4Q Net Profit Grew 74%

Singapore’s residential property curbs are set to stay in place for at least another year amid signs the city’s housing market is stabilizing, the chief executive officer of Southeast Asia’s biggest developer said.

“We see volume picking up and the price declines have slowed,” Lim Ming Yan, the president and CEO of CapitaLand Ltd., said in a Bloomberg Television interview with Haslinda Amin on Wednesday. “We see this trend continuing for 2017. There is no compelling reason for the government at this point to make major changes,” to property curbs, he said.

Lim was speaking after the Singapore-based developer said net income climbed 74 percent to S$430.5 million ($303 million) in the three months ended Dec. 31. Revenue rose 7 percent to S$1.9 billion. For the year, net profit rose 12 percent to S$1.2 billion.

CapitaLand shares closed 0.9 percent higher in Singapore, extending this year’s gain to 16 percent.

CapitaLand’s Singapore home sales more than doubled to 571 units during the year, and sales in China rose 14 percent. Singapore and China accounted for 84 percent of annual group earnings before interest and tax, up from 79 percent the previous year.

“Singapore and China continue to be CapitaLand’s core markets, while we scale up in markets such as Vietnam,” Lim said in the earnings statement.

The developer has more than 8,000 homes ready to be sold in China and expects to hand over 6,000 this year, the company said.

Price Declines

Singapore home prices fell 3 percent in 2016, the third straight annual decline, as the government held steadfast on its cooling measures. Prices fell for a 13th straight quarter in the three months ended Dec. 31, the longest streak since data was first published in 1975.

The existing stock of unsold homes may take three years to sell, according to Augustine Tan, president of the Real Estate Developers’ Association of Singapore.

The government has signaled it is reluctant to ease property curbs, including capping debt repayments at 60 percent of a borrower’s income and higher stamp duties, as it wants to avoid overheating the market again.

Singapore home sales rose 18 percent to 381 units in January from a year earlier, the best yearly start since 2014, data released Wednesday by the Urban Redevelopment Authority showed.

Volatile Times

Lim said the global environment is uncertain and volatile, with the biggest risk being how the China-U.S. relationship develops. President Donald Trump has threatened to slap tariffs on Chinese goods and label the nation a currency manipulator. He further antagonized China by calling into question the ‘One China’ policy after a telephone call with Taiwanese President Tsai Ing-wen, before a soothing phone conversation with China’s President Xi Jinping last week.

“These are the two largest economies in the world, so if there are on good terms many other businesses can grow, but if they are not on good terms then we have to be mindful that there could be situations we will have to manage,” he said.

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