Chief Editor May 24 2022

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City Developments suffers 41% drop in Q1 new home sales due to property cooling measures

Singapore property developer, City Developments Limited (CDL), cautioned that the property cooling measures introduced on 16 December 2021 have adversely impacted the market sentiment as several new home buyers adopt a wait-and-see approach.

In Q1 2022, the Group and its joint venture (JV) associates sold 188 residential units with a total sales value of $477.9 million, a 41% decrease in units sold year-on-year. Whereas in Q1 2021, CDL achieved 319 new home sales worth $513.6 million. 

Nevertheless, CDL expects the Singapore property market to remain resilient and housing prices to hold firm due to moderate supply and strong underlying fundamentals.

Market activities are expected to improve with new projects launches this year 2022. With the easing of COVID-19 safety measures, construction activities have accelerated as the labour crunch eases.

In January, City Developments submitted the top bid of $768 million for a 210,623 square feet (sq ft) Government Land Sales (GLS) site at Jalan Tembusu, located within walking distance to the upcoming Tanjong Katong MRT station. The site was awarded to the Group, with its JV partner MCL Land taking a 49% interest in the project. The proposed development will comprise four blocks of 20 to 21 storeys with about 640 units.

In May this year, CDL and MCL Land launched the highly anticipated 407-unit Piccadilly Grand. The rare city fringe integrated development on Northumberland Road is directly linked to Farrer Park MRT station and the residences are seamlessly connected to Piccadilly Galleria, which houses 1,500 square metres (sqm) of F&B and retail space and a 500 sqm childcare centre on the ground floor.

The launch weekend of Piccadilly Grand saw a strong take-up, with 315 units (77%) sold at an average selling price of $2,150 per square foot (psf), reflecting the strong demand for well-located and thoughtfully designed new launch project.

Recently, the Government also announced the 35% Additional Buyer’s Stamp Duty (ABSD) on the transfer of residential properties into living trusts to level the playing field in the ABSD regime. However, the impact on the property market is minimal as such transactions are generally low. Moreover, genuine beneficiaries can apply for a refund based on their current property ownership status.

With the relaxation of safe management measures since 29 March 2022, there is a gradual increase in occupiers returning to the workplace, bringing vibrancy to the office community. With the reopening and tight office supply in 2022 and 2023, the Group is cautiously optimistic on the office market recovery.

As at 31 March 2022, the Group’s Singapore office portfolio had a healthy committed occupancy of 93%, above the island-wide occupancy of 88%. Republic Plaza, the Group’s flagship Grade A office building in Raffles Place, is 95% occupied and registered positive rental reversion in Q1 2022.

CDL retail portfolio occupany rate is at 95%, above the island-wide occupancy of 92%. The Group’s flagship mall, City Square Mall, is 97% occupied and average tenants’ sales have also recovered in Q1 2022 to close to pre-pandemic levels. At Palais Renaissance, committed occupancy reached 99% and average GTO sales have surpassed pre-pandemic levels.

Singapore progressive easing of social distancing measures and the rise in inbound travel will boost the recovery of footfall and tenants’ sales. However, retailers remain cautious due to manpower shortages and rising operating costs.