Source : Straits Times - 2 Aug 2008
Interim earnings halved to $763m, but condo launches won’t be held back
Property giant CapitaLand expects the market to stay sluggish for a while but it is still preparing to launch three mid- to high-end condos here before Christmas.
‘For outlook…it’ll probably be very flat,’ said chief executive Liew Mun Leong at a results briefing yesterday that unveiled a plunge in first-half profit.
Prices in general will be ‘quite flat’, with a correction seen in the high-end segment, said Mr Liew after the meeting. He added that demand for mass market homes is ’still very good’ while mid-end home prices are holding well.
The picture in the high-end segment is not as rosy as prices have fallen after buyers bailed out of the market overnight. But CapitaLand said high-end prices remained relatively high.
‘High-end volume will slow down, prices will not hit $5,000 psf but will still be above $3,000 psf,’ said Mr Liew. ‘As I keep saying, it is much more than pre-Asian financial crisis prices.’ Home prices reached around $2,400 per square foot (psf) at the 1996 peak.
CapitaLand said in its results statement that sentiment in the local property market is likely to remain cautious for the rest of the year until there is greater stability in the global financial markets and improved credit environment.
But demand is still there, it said. Against this backdrop, CapitaLand is planning to release two projects in River Valley - the 127-unit Latitude in Jalan Mutiara and the 186-unit The Wharf Residence in Tong Watt Road.
It will also launch Urban Resort, which will have about 70 units on the former Silver Tower site in Cairnhill, at above $3,000 psf.
Pre-launch sales have started at the two River Valley projects. CapitaLand said it has sold 11 out of 40 units at an average of $2,400 to $2,500 psf during the preview for Latitude in the first half of the year. It has also sold ‘close to 30′ of 80 units at $1,500 to $1,900 psf since the preview for The Wharf held three weeks ago.
Meanwhile, CapitaLand reported a 43.5 per cent drop in second-quarter net profit to $515.2 million on the back of a 12.3 per cent fall in revenue to $820.1 million. The drop came largely on lower home sales and amid an absence of one-off gains.
First-half profit was $762.7 million, down nearly 50 per cent, while revenue fell 7.7 per cent to $1.45 billion.
CapitaLand has had to delay the launch of residential projects in China due to bad weather delaying construction.
Earnings before interest and tax from overseas contributed 54 per cent of the total, as China’s contribution rose on the fair value gain of Raffles City Shanghai. Australia’s contribution fell nearly 82 per cent due to provision for foreseeable losses on development projects and lower fair value gains.
Second-quarter earnings per share was 18.3 cents, down from 32.6 cents last year, while net asset value per share reached $3.68, up from $3.54 at the end of last year.
CapitaLand shares fell 23 cents to $5.47 yesterday.
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