Kwek Leng Beng: Property slowdown not widespread

Source : Straits Times - 15 Aug 2008

Lower prices may be due to panic-selling by a few owners, says CDL chief

CITY Developments (CDL) chief Kwek Leng Beng is not convinced that the property market slowdown is as widespread as it seems, despite the recent easing in home sales and prices.

The executive chairman of Singapore’s second-largest developer said the lower prices may just be the result of ‘panic-selling’ by a few owners who had bought their high-end homes cheap.

‘There is a bit of panic in the market, and what has gone up very high in a straight line will also come down,’ Mr Kwek said, referring to how property prices have soared in the last few years. But he added that a few lower-priced sales may not be representative of the overall high-end market.

‘Bear in mind, just because of a couple of low transactions, one swallow doesn’t make a summer,’ he said yesterday at the release of CDL’s second-quarter financial results. He added that few buyers so far have defaulted on their purchases.

Mr Kwek also brushed aside concerns about a looming oversupply of homes in the market. He cited higher land and building costs, pressure on the construction sector that may result in completion delays, as well as possible financing difficulties faced by developers who want to build new homes.

CDL yesterday posted a 15 per cent drop in net profit to $165.2 million for the three months to June 30. It said this was due to the absence of a one-off tax credit given last year, without which net profit would actually have risen 0.6 per cent. Revenue inched up 0.7 per cent to $780.8 million.

But Mr Kwek stressed that the current slowdown is ‘different from the Asian financial crisis of 1997′, saying CDL has ‘very little unsold residential stock, a healthy balance sheet and locked-in profits yet to be recognised from its pre-sold residential units’.

Between now and December, the group plans to launch phase 2 of Livia in Pasir Ris, as well as two new projects: The Arte in Thomson Road and The Quayside Collection at Sentosa Cove.

Earnings per share dropped to 17.5 cents in the second quarter, from 20.7 cents a year ago, CDL said. But group net asset value rose to $5.77 as at June 30, from $5.72 as at Dec 31 last year.

The group also said it has signed up all the anchor tenants for its City Square mall in Kitchener Road and is filling up the rest of the space steadily.