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CDL warns of tough times as property curbs remain

SINGAPORE — The Republic’s property market is in for another challenging year with cooling measures set to stay in place and with the introduction of new measures in the construction sector, City Developments Limited’s Executive Chairman Kwek Leng Beng said yesterday after the company reported an 11 per cent fall in fourth-quarter net profit.

SINGAPORE — The Republic’s property market is in for another challenging year with cooling measures set to stay in place and with the introduction of new measures in the construction sector, City Developments Limited’s Executive Chairman Kwek Leng Beng said yesterday after the company reported an 11 per cent fall in fourth-quarter net profit.

The head of Singapore’s second-largest listed developer maintained his forecast of a 10 per cent fall in prices this year, after his call for the Government to tweak some of the curbs went unanswered. In his Budget speech last week, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam acknowledged that while the Government’s successive rounds of measures were working, it was too early to start pulling back.

Mr Kwek said: “In view that the Government has very recently announced … that it will not be relaxing the property cooling measures soon and will further tighten foreign labour in the construction sector, macro headwinds are expected to continue to weigh on the domestic property market.

“I’m not as disappointed (because) if you read the Finance Minister’s speech carefully, he said (the Government) is not engineering a collapse of the property market … It doesn’t matter if they treat it today or tomorrow, as long as they have the mindset that we have to do something when the market is not so good.”

He added that he remained hopeful some measures, especially those limiting foreign investments, might be tweaked in due course to alleviate any prolonged down cycles.

“When you see that volume starts to swing and prices come down maybe 0.1 to 0.2 per cent, you may think it’s nothing, but adding that up can be quite a lot (of declines) per annum. I believe the government is fully aware but it’s a question of when is the right time to press the button, and the right time can be a judgment call,” he said.

Mr Kwek also called for changes to the Qualifying Certificate (QC) rule, which applies to developers whose shareholders and directors are not all Singaporeans, as doing so will help to moderate bidding for land.

“I believe with QC in place, competition for every site (is intense) … Without any sites, business comes to a standstill so developers have no choice but to bid higher and higher,” he said.

City Developments reported a 11.4 per cent on-year drop in its fourth-quarter net profit to S$221 million and a 12.6 per cent fall in revenue to S$774.4 million. The company attributed the fall to lower contributions from its property development segment, as earnings from a few completed residential projects have not been recognised. CDL’s performance in the same period a year ago was also boosted by gains from the sale of several industrial land parcels.

For the whole of last year, the developer sold 3,210 homes compared with 2,395 units in 2012. However, in light of difficult conditions in the domestic property market, CDL aims to be less Singapore-centric and plans to expand its footprint overseas in order to diversify risk.

“We want to build an international external wing, and that’s why we have decided to appoint Mr Grant Kelley (as the Chief Executive) because he can bring in an external angle … We cannot forever be Singapore-centric and do the way we have been doing; a company evolves over time,” Mr Kwek said.

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