Singapore Curbs May Make Property a Buy, Says CapitaLand CEO
(Bloomberg) -- Singapore’s latest round of property curbs are probably enough to cool the market, and may present buying opportunities, the head of the city-state’s biggest developer said.
“With the recent property curbs, we see new situations, new opportunities arising,” CapitaLand Ltd. Chief Executive Officer Lim Ming Yan said in a Bloomberg Television interview Wednesday.
Singapore took additional steps to reign in property prices last month after a sudden rebound in speculative demand threatened to undo years of carefully implemented curbs. CapitaLand had been reducing its exposure to Singapore’s residential market and now, as prices soften, may be in a position to look at potential buying opportunities that arise.
Private residential prices in the city-state increased by 3.4 percent in the second quarter versus a 3.9 percent increase in the previous quarter, Urban Redevelopment Authority data show. Lim said he expects housing prices to moderate post the curbs. “At this point in time these measures are probably adequate,” he added.
CapitaLand earlier said net income rose 4.4 percent to S$606 million ($444 million) in the three months ended June 30 from a year earlier. Revenue climbed 35 percent to S$1.34 billion, fueled by increased residential sales in China and rents from newly acquired properties in Singapore and Germany.
With S$93 billion of assets under management as of June, CapitaLand’s two biggest markets are Singapore and China. The company bulked up its China land bank in June with the purchase of a Chongqing site and is expanding in nations such as Vietnam and Indonesia.
“We still like Vietnam, we still like China,” Lim said. “In China, residential is still a big part of the business.”
Also bullish on China is City Developments Ltd. It reported net income for the second quarter of S$204.8 million on Wednesday, and revenue of S$1.36 billion.
With real estate being a key driver of China’s economy, it will be in the government’s interest to ensure the market continues to be robust," Singapore’s second-biggest developer by market value said in a statement. "The group will remain prudent in investing in China and continue to seek development opportunities in Tier 1 and Tier 2 cities."
City Developments said sales volumes for new launches in Singapore are lower than before the government’s cooling measures.
"In just a few hours before the recent cooling measures came into effect, three developers brought forward their launches and buyers rushed and snapped up over 1,000 units across three projects," City Developments said. "After the cooling measures took effect, sales transactions have been lukewarm."
It added that for those developers that had managed to attract interest, launch prices would probably have been adjusted to spur sales.
CapitaLand Chief Investment Officer Lee Chee Koon said Singapore’s cooling measures would mean some moderation in the short term, while presenting potential "interesting opportunities" down the track.
After buying a second Grade A office in Frankfurt last quarter, CapitaLand’s Lim said Europe is also an attractive destination. “We believe that right now, when we compare across all the different markets, Europe presents an opportunity,” he said.
Overall, CapitaLand will continue to allocate 50 percent of its capital to emerging markets, and 50 percent to developed markets, said Lim, who is set to retire at the end of this year after six years at the helm.
The developer’s second-quarter earnings before interest and tax of S$1.35 billion, up 37 percent from the same quarter last year, was thanks in part to higher fair value gains from the revaluation of investment properties in Singapore, China and Europe.
©2018 Bloomberg L.P.