CapitaLand gains dive, flat property market expected

Aug 2, 2008
CapitaLand gains dive, flat property market expected
Interim earnings halved to $763m, but condo launches won't be held
back
By Joyce Teo, Property Correspondent

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.