City Developments Limited (CDL) C09 has reported a “resilient” set of results across all of its business segments for the 1QFY2023 ended March 31.
In property, CDL and its joint venture (JV) associates sold 88 units, 53.2% lower than the 188 units sold in the 1QFY2022. In this quarter, the 88 units had a total sales value of $213.2 million, 55.4% lower than the total sales value of $477.9 million in the corresponding quarter in the year before.
The lower number of units sold was due to the absence of a new launch during the period and the group’s substantially sold inventory.
The group’s 820-unit Piermont Grand executive condominium and the 188-unit Haus on Handy obtained their temporary occupation permits (TOPs) in January and April respectively. Both projects have been fully sold. In line with prevailing accounting standards, the group will recognise the revenue and profit from Piermont Grand EC in their entirety in 1QFY2023.
On the back of the Singapore government’s latest round of cooling measures introduced on April 26, the group says it expects this round to impact projects with a higher proportion of foreign demand, typically high-end/luxury properties in prime districts in the near-term.
However, the mass and mid-tier segments are expected to see minimal impact where most buyers are locals and Singapore permanent residents (PRs). According to the group, this was evidenced by the three recent launches that took place after the cooling measures were announced.
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Overseas, 92% of the 198 units in The Marker in Melbourne, Australia, have been sold to date. The group’s 60-unit Fitzroy Fitzroy project is 40% presold. In Brisbane, CDL’s 215-unit Brickworks Park is 49% presold while the 97-unit Treetops at Kenmore JV project is also 49% presold.
The group’s office portfolio in Singapore reported a committed occupancy of 94.3%, above the islandwide occupancy of 88.8%. The group’s retail portfolio also stood healthy with a committed occupancy of 97.6%, higher than the island-wide occupancy of 92.4%.
Not much is said about CDL’s Chinese market, although the group says the demand in the country’s commercial real estate market is expected to increase in mid-2023 on the back of China’s reopening and the increase in home prices and sales in the real estate market. The group says it continues to look for opportunities to expand its footprint and recycle its capital in China.
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In the UK, the office component of St Katharine Docks currently enjoys a strong occupancy rate of 90% with a well-diversified tenant base across sectors such as consulting, shipping, education and co-working spaces. CDL completed the acquisition of the mixed-use asset in March.
Since the Phase 1 revamp of Jungceylon Shopping Center in Patong Phuket was unveiled in mid-December 2022, the mall has achieved a committed occupancy of 75% as at end-March 2023. The remaining asset enhancement initiative (AEI) phases remain on track to complete by the end of 2023, says CDL.
CDL’s private rented sector in the UK continues to be a counter-cyclical asset class post-pandemic. Leasing is ongoing for The Junction, the group’s development in Leeds, which obtained practical completion for three out of five blocks or 307 out of 665 units.
In Japan, CDL expects to maintain its leasing momentum for its private rented sector assets in the 1HFY2023 due to strong demand from residents and corporates as border restrictions ease and foreign nationals return. The group acquired two such assets totalling 201 units in Osaka for 31.5 billion yen ($314.1 million), bringing its total assets under the private rented sector to 10 with 714 units. The country’s sector portfolio has a strong average occupancy of above 95%.
The group’s purpose-built student accommodation (PBSA) portfolio, which comprises around 2,400 beds across five cities in the UK, has locked in strong committed occupancy of 98% for the academic year 2022/23. With high demand and post-pandemic recovery, significant rental growth is expected in the next academic year.
In hospitality, CDL’s hotels registered a global revenue per available room (RevPAR) growth of 65.4% y-o-y to $131.2 for the 1QFY2023. The growth was attributed to the recovery seen in Asia and Australia although the group saw RevPAR increases in the rest of its markets. In Singapore, hotels saw RevPAR of $164.30, 88.9% higher y-o-y.
As at March 31, CDL’s net gearing ratio stood at 55% after factoring in fair value on investment properties and after the acquisition of St Katharine Docks. Its interest cover ratio stands at 3.1x. The group has strong cash reserves of $1.9 billion.
“Despite the challenging global outlook and geopolitical tensions that continue to impact businesses globally, the group is confident of weathering through the uncertainties and maintains a lookout for suitable investment opportunities,” it says in its statement released on May 19.
Shares in CDL closed 2 cents lower or 0.29% down at $6.89 on May 19.
