City Developments 2Q18 net profit surges nearly 80 percent amid strong home sales

Singapore two-dollar bills

City Developments reported on Wednesday that net profit for the second quarter surged 79.5 percent on-year to S$204.8 million amid strong residential sales in Singapore and China, but it issued a note of caution after recent cooling measures in the city-state.

Revenue for the quarter ended 30 June rose 59.2 percent on-year to S$1.36 billion, the property developer said in a filing to SGX before the market opened on Wednesday.

“The strong performance from the group’s property development segment for the second quarter of 2018 was powered mainly by three projects – New Futura and Gramercy Park in Singapore, and Hong Leong City Center (HLCC) in Suzhou, China,” City Developments said.

It declared a special interim dividend of 6.0 Singapore cents a share, up from 4.0 Singapore cents in the year-earlier period.

For the first half, net profit rose 35.8 percent on-year to S$284.8 million, while revenue rose 47.6 percent on-year to S$2.417 million, it said.

In the first half, City Developments and its joint venture associates sold 651 units in Singapore, including executive condominiums, which are a hybrid public-private housing class, with a total sales value of S$1.29 billion, it said. That compared with the year-earlier period’s 691 units with a total sales value of S$1.15 billion, it said.

In China, in the first half, the company and its joint venture associates sold 170 units and villas with a total sales value of 691.06 million yuan, or around S$138 million, the filing said.

But the property developer issued a note of caution in its outlook after the Singapore government recently imposed strong property cooling measures.

“We had two quarters of strong residential sales in Singapore, but market dynamics changed after the unexpectedly harsh property cooling measures were announced in July. Sales are expected to moderate though prices may be sustained for very few quality projects in good locations where there is limited supply and pent-up demand,” Kwek Leng Beng, City Development’s executive chairman, said in the statement.

“Having navigated various property cooling measures over the years, we have seen that sentiment and timing are critical. As our land bank was bought relatively early before prices rose further, this gives us more flexibility for the commencement of construction and sales launches,” he added.

Get Shenton Wire headlines in your inbox