Keppel Land cautious despite rise in net profit

SINGAPORE — Keppel Land sounded a cautious outlook on the Singapore private residential property market yesterday, saying that it expects home sales and prices to fall even further this year as ongoing cooling measures continue to dampen sentiment.

The comments came as financial results released yesterday showed that Keppel Land’s home sales in Singapore took a steep fall in the first half of the year. It sold 98 units in the first six months, versus 210 units in the same period last year.

Likewise in China — which is also one of Keppel Land’s core markets — home purchase restrictions and the tightening of bank lending continued to affect sales, taking its overall residential transactions to 1,060 units between January and last month, compared with 1,940 units in the first half of last year. Nonetheless, the recent loosening of property measures in some cities and robust demand from end-user buyers are expected to steady the market, it said.

“The first six months have proven to be challenging as the ongoing enforcement of property cooling measures in Singapore and China continued to dampen the property market,” said Keppel Land chief executive officer Ang Wee Gee.

“Singapore and China are expected to remain challenging in the second half ... In Singapore, we expect the volume of home sales this year to be lower than last year but demand for residential projects with strong marketing attributes and competitive pricing will continue to hold up,” he added.

Soft sales notwithstanding, Keppel Land reported its second-quarter net profit rose 12.3 per cent to S$107.2 million in the second quarter, as a result of higher contribution from The Botanica in Chengdu following the completion of Plot R5B in May, as well as write-back of cost accruals that were no longer required.

Revenue fell 7.8 per cent in the second quarter to S$304.6 million, due primarily to lower income from the property trading and fund management segments.

Earnings from overseas represented about 33.2 per cent of the group’s net profit during the period, compared with 33.8 per cent in the year-ago period.

Private residential prices in Singapore fell 1.1 per cent in the second quarter of 2014, the third consecutive quarter of decline, flash estimates from the Urban Redevelopment Authority showed earlier this month. About 4,460 new private residential units were sold in the first half, down 55 per cent from the same period last year.

Despite these challenges, Keppel Land said selected well-located homes with competitive pricing will continue to attract discerning buyers.

It plans to launch in the second half of the year Highline Residences, a CBD-fringe condominium development located close to Tiong Bahru MRT station.