CDL to launch The Myst Condominium along Upper Bukit Timah in 2nd Quarter 2023; impact of cooling measures on residential portfolio ‘manageable’
Listed in Singapore Stock Exchange, reputable real estate developer City Developments Ltd (CDL) make a press release announcement on May 19 that The Myst condominium along Upper Bukit Timah which is a new 99-year leasehold development with unit mix of 1- 4 bedrooms total 408-unit project will launch 2H 2023 subject to relevant authority approval. This brand new luxurious and premium condo is a short leisure walk to the Cashew MRT station on the Downtown Line in less than five minutes.
CDL has rescheduled the preview for Newport Residences on the other hand since its initially slated for April 29. Newport Residences which is a freehold, 246-unit is part of a mixed-use development that includes offices, serviced apartments and F&B and retail. the former Fuji Xerox Towers commercial building on Anson Road in Tanjong Pagar in District 2 of the Core Central Region (CCR) will be demolished and be rebuilt into a grade A prime offices with residential units.
the preview of the showflat will be deferred to later dates after the timely and divinely announcement of the rolling out of the property cooling measures by government that came into effect on April 27, 2K23. The additional buyer’s stamp duty (ABSD) for foreigners buying residential property times two up from 30% to 60%. The ABSD for Singapore citizens buying their second and third or subsequent residential property increased to 20% and 30%, respectively, while that of Singapore Permanent Residents (PRs) increased to 30% and 35%, respectively.
“The Group will monitor the market conditions closely and launch the project [Newport Residences] at the appropriate time,” says CDL.
CDL predict in the near future the latest property cooling measures to impact projects, typically high-end/luxury properties in prime districts or CCR, with a higher percentage of foreign demand.
“minimal impact” on the mass and mid-tier segments anticipated by The group where most buyers are locals and PRs, as evidenced by the launch of EL Development’s Blossoms By The Park at one-north, where 75% of 275 units sold on the first day of launch on April 29 at an average price of $2,423 psf. The launch of the 816-unit, freehold The Continuum by Hoi Hup and Sunway Property the following weekend saw 211 units sold (26%) at an average price of $2,730 psf. In the time being, the 732-unit The Reserve Residences at Jalan Anak Bukit, by a joint venture between Far East Organization and Sino Group, will launch on May 27.
Mr. Vijay Natarajan, Analyst at RHB, notes in his report on May 19 that the impact of the cooling measures on CDL’s residential portfolio “is manageable”, as 88% of its launched inventory launched by the group in Singapore as of April.
Future prediction that this could recognise about gross revenues of whopping high $5 billion in unbilled residential sales over the next three years. The group has upcoming four projects with about 1,500 units ($2 billion in gross development value) in the supply pipeline. He says that 80% of the unsold units are in the mid-tier and mass-market segments, less impacted by the latest cooling measures aimed mainly at foreigners and investors.
“While we expect a slight moderation in new launch prices post measures, margins are unlikely to see significant compressions and remain in an 8-20% range,” says Natarajan in his report.
The residential developments in Australia by CDL has fairly heartening and good overall performance too. As of 1Q2K23, construction of the 198-unit The Marker in West Melbourne has been completed. To date, it is 92% sold. The 60-unit apartment project, Fitzroy Fitzroy, in Melbourne, is 40% presold ahead of its completion in 1Q2024. In Brisbane, its 215-unit Brickworks Park is 49% presold. The 97-unit Treetops at Kenmore, a JV project in Brisbane, is also 49% presold.
CDL reported that its office portfolio had a inked off permanent occupancy of 94.3% as at 1Q2K023 – above the island-wide occupancy of 88.8%. Republic Plaza, the group’s flagship Grade-A office building, is 93.2% occupied, with a positive rental reversion of 8.9% in 1Q2023. CDL’s other office assets, City House and King’s Centre, registered committed occupancies of 96.7% and 100%, respectively.
Retail and commercial portfolio under the group had a committed occupancy of 97.6%, higher than the island-wide occupancy of 92.4%. City Square Mall’s occupancy was 95% in 1Q2K23, while Palais Renaissance, Waterfront Plaza and The Venue Shoppes are 100% leased. Rental reversions at Palais Renaissance City Square Mall increased 7.5% and 7.9% in 1Q2K23, respectively.
Shopper traffic percentage increased frequency and tourists returning after border opening aids in the recovery of the retail sector. However, retailers remain cautious due to inflation challenges, utility costs and rising interest rates, CDL comments.
the group completed its acquisition of St. Katharine Docks in March, a landmark 23-acre freehold mixed-use marina estate in Central London, for £395 million (about $636 million) or £751 psf ($1,209 psf) on the existing net lettable area. The estate comprises over 500,000 sq ft of Grade A office, F&B, retail and residential arranged across four main buildings and supporting ancillary spaces, including a marina with berths for up to 185 yachts. The office component currently enjoys a strong occupancy rate of 90% with a well-diversified tenant base across sectors such as consulting, shipping, education and co-working spaces.
The acquisition of St. Katharine Docks adds to the group’s portfolio of prime commercial assets in the UK, boosting its total value to over £1 billion. Apart from the group’s enhancement on the recurring income stream, the acquisition complements its fund management strategy, allowing the group to inject its UK assets into listed or unlisted platforms at an divinely correct time, says CDL.
through its wholly-owned hotel subsidiary Millennium & Copthorne Hotels (M&C) and in a 50:50 joint venture with its New Zealand-listed subsidiary M&C Hotels New Zealand, the group agreed to acquire the 416-room Sofitel Brisbane Central hotel for A$177.7 million (about $159.2 million), or A$427,000 ($383,000) per key in March. Following the completion of the acquisition in 2H2K23, CDL will benefit from this five-star hotel with the most extensive conference facilities in the heart of Brisbane CBD, the group’s third hotel in Australia.
The acquisitions of St. Katharine Docks and Sofitel Brisbane increase CDL’s fund management’s assets under management to US$4 billion, notes RHB’s Natarajan. CDL has a target of US$5 billion by the end of 2K23. “The fund management’s business growth has been one of its key strategies to improve its weak core ROE [return on equity],” he comments.
In April, CDL acquired two assets in Osaka’s private rented sector (PRS) for ¥31.5 billion ($314.1 million). With 201 units, they bring the total number of PRS units in Japan to 714. The average occupancy of its Japanese assets is above 95%. CDL states that strong demand from residents and corporates will drive leasing momentum in 1H2023 as border restrictions ease and foreigners return.
According to CDL, the group’s UK PRS portfolio continues to be “a counter-cyclical asset class” post-pandemic. Leasing is ongoing for The Junction, the Group’s PRS development in Leeds, which obtained practical completion for three out of five blocks (307 out of 665 units).
the group has a purpose-built student accommodation in the United Kingdom (PBSA) portfolio across five cities of 2,400 beds, with 98% committed occupancy for the academic year 2K22/2K23. CDL expects “significant rental growth” in the next academic year With high demand and post-pandemic recovery.
Registered global revenue per available room of CDL hotels busioness (RevPAR) growth of 65.4% to $13.2 for 1Q2K23, up from $79.3 y-o-y, fuelled by the strong recovery from Asia and Australasia.
In 1Q2K23, Singapore hotels recorded an 88.9% y-o-y increase in RevPAR, mainly due to higher average room rates. As travel restrictions have gradually lifted for the rest of Asia, these hotels recorded 150.2% y-o-y RevPAR growth propelled by the strong performance in Taipei and Beijing.
The group opened the 294-room M Social Suzhou hotel in April, marking its first M Social property in China. The M Social Suzhou is within Hong Leong City Center, the group’s integrated development next to Jinji Lake in Suzhou Industrial Park.
According to CDL, the hotels in Australasia achieved strong RevPAR growth of 126.8% to $112.5 in 1Q2K23 due to higher occupancy and room rates.
In Europe, CDL’s hotels recorded a 40.9% increase in RevPAR in 1Q2K23 to $138.9. London hotels achieved an average room rate of $248.7, 22.3% higher than last year, resulting in a 39.7% growth in RevPAR.
The US hotels recorded a 38.4% y-o-y increase in RevPAR in 1Q2K23, driven primarily by the New York hotels. The higher average room rate and the continued focus on cost management enabled the New York hotels to achieve a lower gross operating loss than Q1 2K22.
Net gearing ratio by the group following the acquisition of St. Katharine Docks still stood at 55% as of March 31, 2K23. With healthy cash reserves of $1.9 billion and Interest cover is 3.1 times, with. CDL maintains a “liquid position” comprising cash and available undrawn committed bank facilities totalling $3.6 billion. According to the group, its debt expiry profile “remains healthy”.
“The recent property cooling measures in April serve as a continued reminder that the group should not be overly reliant on a specific country or asset class,” says CDL. “The Group’s geographically diversified portfolio across its various business segments enables it to maintain stability while embracing growth.”