Singapore's City Developments Reports Fall in Profits

Singapore's City Developments Reports Fall in Profits

Residential News » Asia Pacific Residential News Edition | By WPJ Staff | February 27, 2014 1:42 PM ET

City Developments Ltd, Singapore's second-largest developer, announced an 11 percent decline in fourth-quarter profit as the company faces a challenging market at home. 

Net income totaled S$221 million ($174 million) during the final quarter of 2013, falling from S$249 million the prior year. Sales for the company fell to S$774 million, from S$886 one year earlier, according to a company statement. 

"I expect City Developments to bolster its overseas business," Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore, told Bloomberg. "The operating landscape for developers has become challenging as competitive land bids amidst slowing residential demand is eroding developers' margins." 

Home prices in Singapore fell for the first time in almost two years during the final quarter of 2013, underscoring the effects of the four-year government campaign to cool the property market. 

January home sales fell to the lowest level in five years. Last summer, the government introduced new measures stating a property buyer's monthly payment on a property loan cannot exceed 60 percent of their monthly income. 

However, CDL remains confident it will successfully handle global economic uncertainty as well as challenges at home. 

"CDL is poised to reap the benefits from its establishment of China and London platforms and will continue to pursue opportunities in these markets," Mr. Kwek Leng Beng, CDL executive chairman, said in a statement. "It will also actively seek opportunities in mature markets such as the US, Japan and Australia. These economies are just recovering and their capital markets have the sophistication, transparency and corporate governance protocols that are akin to Singapore's."

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