CDL: Property investment can help narrow income gap
Firm hopes Govt will tweak cooling measures; posts 2.8% rise in profit
PROPERTY investment can help fight income inequality as it gives people a viable asset that they can add to their portfolios, said City Developments (CDL) yesterday.
The firm also said it hoped the Government would tweak some of the property cooling measures that have "stamped out speculation" in the market. It believes one way to help narrow the income gap "is to enable people to invest in different classes of assets so that they can diversify their investment portfolio - and property should be part of the basket of assets", it said in remarks as part of its first-quarter results.
CDL noted that it has seen "the majority of property buyers follow the 'herd instinct'". When prices fall, they tend to "wait and see", but when there is increased activity and prices start rising, more people are eager to buy. "Quite often, this psychology of property buyers and other factors outweigh the fundamentals of supply and demand projections."
But while statistics provide part of the overall market assessment, "investors must realise that the property market is cyclical in nature", it added. "History has shown that real estate assets in a safe and stable environment like Singapore remain a good investment when viewed with a medium- to long-term perspective."
CDL announced a rise in first-quarter net profit to $123.03 million, a 2.8 per cent increase on a year earlier, thanks to contributions from property development and hotel operations.
Revenue for the three months to March 31 was up 11 per cent to $814.94 million. Turnover from development, including projects such as Coco Palms, D'Nest and Jewel @ Buangkok, rose 16 per cent to $298.57 million.
Despite headwinds in the local residential market, the firm noted, quality projects in good locations will still attract discerning buyers. It will launch two new projects in the second half of this year - The Brownstone, a 638-unit executive condominium in Sembawang, and Gramercy Park, a 174-unit freehold condo in Grange Road.
Revenue from hotel operations rose 6.2 per cent to $375.98 million, thanks to income from new hotels acquired last year and better performance from refurbished outlets. Revenue from rental properties rose 4.3 per cent to $99.19 million while turnover from other sources was up 47.3 per cent to $41.21 million.
Earnings per share was 13.5 cents for the quarter, up from 13.2 cents a year back. Net asset value per share was $9.43 as at March 31, up from $9.25 as at Dec 31. A dividend of 1.93 cents per preference share was declared, to be paid out on June 30.
CDL shares closed up nine cents to $10.19 yesterday.
The Straits Times / Money Published on Thursday, 14 May 2015