According to Mr Kwek Leng Beng, Executive Chairman City Developments Ltd (CDL), the real estate market in Singapore is yet to overcome the worst. The prices of homes have fallen for the third year in a row in 2016 mainly because of the property cooling measures imposed by the government.
In a Bloomberg interview, Kwek said that residential prices might take about 9 months to show signs of recovery. “While I don’t believe the worst part has ended, I think it has slowed down”, said Kwek.
As property cooling measures stayed in place, the prices of homes reduced by 3% in 2016. Quarter four 2016 figures reduced for the 13th quarter in a row, the longest trend downwards since 1975 when data started to be recorded by authorities.
However, Kwek noted that the best time to buy upscale properties is now since prices of homes have reduced sharply since 2013 by 35%.
In the meantime, earnings of CDL reduced by 40.6% y-o-y in Q4 2016 to $243.8m. This was because of the large profits recognized in 2015 quarter four from the second PPS platform. However, Q4 2016 revenue was $1.17 billion, an increase of 36.5%.
Profits for 2016 reduced by 15.5% to $653.2 million as revenue increased by 18.2% to $3.91 billion.
“CDL has recorded credible results even as the economic environment is challenging. Hong Leong City Centre Suzhou with its strong contribution in revenue for 2016,” said Kwek.
Also CDL and its joint venture partners recorded sales of 1,017 residential homes including executive condominium at $1.25 billion. The sales made CDL become one of the top-selling developers in the private sector in Singapore in 2016.
In its plans, CDL intends to launch Gramercy Park second phase by H1 2017 while it will unveil New Futura in H2 2017.
(An artist's impression of Coco Palms)