It’s not the time to buy

End 09, early next year could be better, says CDL chief

CITY Development Limited (CDL) believes it is too early for it to start snapping up property in the downturn.

“The buyer-seller price gap is too wide still, so it’s not time to buy. The end of the year, early next year could be better,” said City Developments Limited’s (CDL) executive chairman Kwek Leng Beng at the group’s annual results briefing yesterday. Asset prices, he said, have not fallen to levels that are attractive enough.

CDL yesterday announced an after-tax profit of $580.9 million, almost a 20-per-cent dip from a year earlier. Even so, that was the group’s second-highest earnings since inception.

It attributed the fall partly to a 5.2-per-cent decline in revenue and lower contribution from its hotel operations under London-listed Millennium and Copthorne Hotels (M&C). This was mostly due to currency conversion, given the Singapore dollar’s recent strength against the British pound.

“Not unexpectedly, 2008 was a challenging year for the Singapore property market with downward pressure on both transaction volumes and sale prices after blistering performance in the previous two years, weighed down by global financial woes,” the company said.

“The group is aware of the many challenges that lie ahead.”

CDL said its balance sheet remained healthy, and it was not planning any rights issue to raise capital. It expects to stay profitable this year.

In the coming year, CDL said it would “exercise prudence” on expenses. It would “keep staff as much as (it) can” in Singapore.

CDL’s net borrowings stood at $3.4 billion, or 32 per cent of assets if fair value gains are taken into account, said chief financial officer Goh Ann Nee.

In the first half of this year, it will launch 60 units at the 724-unit Livia, 100 units at the 336-unit The Arte at Thomson, and 100 units of the 228-unit The Quayside Isle @ Sentosa Cove.

The group has 142 unsold units from projects previously launched projects, with less than 10 per cent of those high-end.

CDL is holding back its South Beach project. It added that based on a recent valuation for the year ended Dec 31, there was no impairment required for the development.

Mr Kwek refuted rumours about consortium partners pulling out of the project.

The company is planning to issue the second tranche of Islamic Sukuk in the first quarter of this year. It is likely to be three or four times larger than the first one. In January, CDL issued $100 million worth of notes under its $1-billion Islamic note programme.