CDL Sees Q1 Sales Fall 41% as Singapore Housing Curbs Bite

City Developments Ltd is optimistic that Singapore’s property market will remain resilient even as government cooling measures and an absence of new launches dragged down the developer’s domestic sales in the first quarter of 2022 to S$477.9 million ($348.2 million), a reduction of 41 percent year-on-year.

In its first-quarter operational update released Tuesday, the group said it sold only 188 units in Singapore during the three-month period, compared with 319 in the first quarter of 2021.

CDL noted that some homebuyers adopted a wait-and-see approach to the market in response to property cooling measures introduced by the government in mid-December. The developer expects home prices to hold firm, supported by moderate supply and strong underlying fundamentals.

The group anticipates upcoming new launches to reinvigorate market activities as construction at most of its projects picks up steam with the gradual easing of the Lion City’s labour crunch.

Piccadilly Launch a Hit

As of 31 March, CDL’s cash reserves amounted to S$3.1 billion. Furthermore, it has S$4.6 billion in cash and available undrawn committed bank facilities and its total gross borrowings have a weighted average expiry of 1.8 years.

In Singapore, the group launched on 8 May the Piccadilly Grand residential scheme, a joint venture with Hongkong Land affiliate MCL Land. At launch, the project on Northumberland Road sold 315 units or 77 percent of all 407 units offered at an average selling price of S$2,150 per square foot.

First-quarter data released on 22 April by Singapore’s Urban Redevelopment Authority showed that developers across the city-state brought to market a total of 613 uncompleted private residential units and 1,825 private residential units, both excluding executive condominiums. The supply figures for the first three months of 2022 are respectively lower than the 2,275 uncompleted private residential units and 3,018 private residential units marketed in the corresponding prior-year period.

For the remainder of 2022, CDL intends to launch more residential developments within the city-state, it noted in its operations update. The company’s supply pipeline includes the 639-unit Tengah Garden Walk executive condominium, the 640-unit Jalan Tembusu condominium, the 408-unit condominium at 798 and 800 Upper Bukit Timah Road and the mixed-use project developed at the former Fuji Xerox Towers at 80 Anson Road that could deliver 256 units.

The company’s pipeline could be welcomed by local homebuyers as the outlook for the Singapore market begins to take a positive turn, thanks to the relaxation of pandemic restrictions including the reopening of the borders to travellers immunised against COVID-19.

On Wednesday, Singapore’s Ministry of Trade and Industry attributed the 8.5 percent year-on-year growth in the real estate sector during the first quarter largely to the private residential segment.

CBRE Research, in its Singapore Figures Q1 2022 report released last month, said new home sales were still likely to decline by 9,000-10,000 units for the rest of the year, but home prices could rise by up to 3 percent.

According to JLL’s Singapore Property Market Monitor report, the cooling measures will continue to stifle demand and home price hikes, but prime rents are tipped to remain in an uptrend over the next 12 months as more foreign workers are welcomed in Singapore, fuelling leasing demand in the country.

Global Footprint, Local Challenges

In Australia, CDL partnered with New Urban Village to acquire in March a mixed-use development site in the Brisbane suburb of Toowong that will be developed to include 125 apartments and retail spaces. Across the country, the company presold four housing developments including a 135-unit luxury retirement project.

CDL said the Omicron variant of the COVID-19 virus heavily affected sales and construction works on its residential developments across China during the reporting quarter. It expects business activities to improve with the reopening of key cities Shanghai, Shenzhen and Suzhou.

Occupancy in the office and retail sections of the company’s Hong Leong Hongqiao Center in Shanghai remained at 93 percent, but the group acknowledged growing pressure to maintain financial support for the property as pandemic restrictions persist.

Two years into the COVID-19 pandemic, CDL’s hotel operations continue to exhibit signs of recovery, with occupancy across all hotel properties worldwide jumping 15.4 percent year-on-year in the first quarter to 52.2 percent from 36.8 percent.

Room occupancy fell 12.4 percent in Singapore, pulling the figure for all of Asia to a 0.9 percent decline during the three-month period. In Australasia, room occupancy across the group’s hotels also dropped 6.1 percent year-on-year during the quarter.