Kwek Leng Beng: Property slowdown not widespread

Aug 15, 2008
Kwek Leng Beng: Property slowdown not widespread
Lower prices may be due to panic-selling by a few owners, says CDL
chief
By Fiona Chan PROPERTY REPORTER

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.