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Home prices could increase by 10% this year, says CapitaLand CEO

Rising sales and prices indicate an end to the four-year slump for Singapore’s housing market.

CapitaLand CEO Lim Ming Yan expects home prices in Singapore to increase by as much as 10 percent this year – a view which is in line with other forecasts, reported Bloomberg.

Analysts at Credit Suisse Group AG expect home prices to rise by up to 10 percent this year, while OCBC Investment Research and Morgan Stanley expect an increase of up to eight percent.

SEE ALSO: Pearlbank Apartments sold to CapitaLand for $ 728m

“Transaction volume has gone up and usually that’s a precursor to some price increase,” Lim said in an interview. “A five to 10 percent increase is possible this year barring any unforeseen major volatility in the capital markets.”

Rising home sales and prices reinforces signs of an end to a four-year housing slump. The market rebound saw developers aggressively bid for land.

While CapitaLand has kept a safe distance from the bidding war, it acquired the iconic Pearlbank Apartments for $ 728 million, with plans to redevelop it into an 800-unit residential complex.

“We continue to look for opportunities in Singapore but we feel the kind of bidding, the price, is too aggressive for us,” noted Lim. “We bid in a very disciplined manner.”

The property developer’s net income dropped 38 percent to $ 267.7 million during the last quarter of 2017 after completing fewer homes to sell in China.

Despite this, CapitaLand shares rose two percent to $ 3.54 in Singapore, the biggest increase since 5 October, after the company increased its full-year dividend by 20 percent.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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Pearlbank Apartments sold to CapitaLand for $728m

CapitaLand intends to redevelop the site into a high-rise residential development comprising around 800 units. (Photo: Colliers International)

Pearlbank Apartments, a 37-storey development in Outram, has been sold via private treaty to CapitaLand for $ 728 million, following the close of its collective sale tender on 19 December 2017, revealed marketing agent Colliers International.

The sale price works out to a land cost of around $ 1,515 psf per plot ratio (psf ppr), after taking into account an upgrading premium of around $ 201 million for the lease top-up. No development charge is payable for Pearlbank Apartments.

Featuring a total of 288 units (280 apartments and eight commercial units), the building has a leasehold tenure of 99 years with effect from June 1970.

Colliers revealed that apartment owners stand to gain between $ 1.8 million to $ 4.9 million from the successful sale of the development, while owners of commercial units could receive between $ 1.2 million to $ 6.9 million.

“While residents of Pearlbank Apartments had previously explored the idea to conserve Pearlbank Apartments due to its history and design, recent sentiment has strongly shifted to redevelopment,” said Alex Poh, chairman of Pearlbank Apartments collective sale committee.

“A deeper analysis of the building structure and the required enhancement work show that conservation would be a costly undertaking and a huge burden for the owners. It is not a viable nor favourable option for the residents,” he noted.

“In addition, the redevelopment of the ageing building will also be in line with the ongoing renewal of Outram. The future development will enhance the architectural transformation of the area and the owners strongly support the redevelopment of Pearlbank Apartments.”

CapitaLand intends to redevelop the site into a high-rise residential development comprising around 800 units, subject to certain conditions.

The property developer saw its total profit after tax and minority interest (PATMI) drop 37.8 percent year-on-year to $ 267.7 million in Q4 2017, while revenue fell 34.6 percent to $ 1.2 billion.

For the full-year 2017, total PATMI increased 30.3 percent to $ 1.55 billion from $ 1.2 billion in 2016, “due to higher portfolio and fair value gains from divestments of Innov Tower in China, One George Street and Wilkie Edge in Singapore, as well as serviced residence properties in Germany, China and Japan”, CapitaLand said in a statement.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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CapitaLand partners EDB to upskill staff

CapitaLand has entered into a $ 10-million partnership with the Singapore Economic Development Board (EDB) to upskill its staff as well as develop technology-enablers to seize opportunities to build the real estate of the future.

Dubbed CapitaLand ELEVATE, the programme is part of CapitaLand’s two-pronged approach to enhance strategic capabilities by internally building depth through training and test-bedding, while externally building breadth through partnerships and corporate venture networks.

“The programme will focus on developing CapitaLand’s employees in areas such as data analytics, digital marketing and digital product management. It will also explore new technologies that will enable CapitaLand to create people-centric products, services and experiences,” said CapitaLand in a release.

Aside from building its internal capabilities, C31 Ventures (C31V), which is CapitaLand’s corporate venture arm, has invested S$ 10 million in startups.

With its portfolio companies including co-working operator The Great Room, customer insights platform Mobikon and omni-channel retail enabler Ace Turtle, C31V has been chosen as one of the co-investment partners of SGInnovate under the Startup SG Equity scheme.

SGInnovate will manage a portion of the funds under this scheme, which involves identifying and co-investing in deep tech startups that focus on technologies such as cybersecurity, blockchain and artificial intelligence.

“Through these efforts, we are reinventing our processes as well as advancing our products and services with new capabilities to create seamless offline and online experiences for our customers,” said CapitaLand president and group CEO Lim Ming Yan.

“This is essential as CapitaLand continues to leverage our strengths in building connected, inclusive and sustainable smart precincts with spaces that are well-used and loved by the community.”

 

This article was edited by Keshia Faculin.

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CapitaLand profit up 28.1% in Q3

Funan Mall redevelopment that cost $ 560m, targeted to be completed in Q4 of 2019. (Photo: Capitaland)

CapitaLand saw its net profit for the third quarter of 2017 increase 28.1 percent to $ 317 million from $ 247.5 million over the same period last year.

It attributed the hike primarily to fair value gains from “Golden Shoe Car Park, the serviced residence component of Funan integrated development in Singapore and Citadines Biyun Shanghai in China, as well as portfolio gains arising from Wilkie Edge in Singapore, CapitaMall Anzhen in China and the 60 percent stake in CapitaLand Vietnam Commercial Fund I”.

Operating profit, however, dropped 18.8 percent to $ 204.5 million from $ 251.8 million previously, due to the lower handover of China residential projects and the divestment of certain Singapore commercial assets.

Group revenue increased 9.7 percent to $ 1.507 billion, due to higher contribution from Singapore development projects, higher rental revenue from newly opened serviced residences and shopping malls as well as the consolidation of revenue from CapitaLand Retail China Trust (CRCT), CapitaLand Mall Trust (CMT) and RCS Trust (RCST).

“Our active portfolio reconstitution has boosted our results as well as our AUM which stands at $ 85.0 billion as at end of 3Q 2017,” said CapitaLand president and group CEO Lim Ming Yan.

He revealed that CapitaLand’s $ 1.28 billion profit for year-to-date September has already surpassed 2016’s full-year profit by eight percent.

CapitaLand noted that residential sales in Singapore remained stable with 108 units sold during the period, taking the total number of units sold in the year to September to 293 with a sales value of $ 1.15 billion.

“This includes units at Cairnhill Nine, which is fully sold as at July 2017, and Victoria Park Villas, which is 86 percent sold as at 30 September 2017,” it said.

 

This article was edited by Keshia Faculin.

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