Private home prices in Singapore may drop by three to five percent this year, due to the recent government measures, said property developer City Developments Ltd (CDL).
Kwek Leng Beng, Executive Chairman of the company, said that home prices may decline after hitting a record level last year and noted that sales volume have already plummeted.
However, prices are unlikely to drop, as demand for homes from overseas buyers is still strong.
In addition to the traditional buyers from China and Indonesia, more money from the Middle East is flowing into the Singapore market in the wake of political turmoil in the region, said Mr. Kwek.
“Residential volumes have started to go down somewhat, but prices are still not down yet,” he noted. “Usually it’s the volume that is the precursor to prices going up or down.”
Mr. Kwek said that unless there is a spike in demand from foreign buyers, home prices will decline between three and five percent.
He also warned that the Singapore government may implement more property measures if the market “improves a lot” and prices don’t fall.
Meanwhile, CDL, which is the second-largest property developer in Singapore, yesterday said that its net profit in the fourth quarter rose 41 percent to S$249.2 million, from S$176.7 million over the same period the previous year.
However, its Q4 revenue dropped 25 percent to S$691 million, from S$922.4 million a year ago.
The company’s Q4 earnings increased even as its revenue dropped. This was mainly attributed to the selling gains from its none-core commercial and industrial properties in Q4 last year.
In terms of full-year results, CDL posted a net profit of S$749 million in FY2010, up 26 percent from S$593.4 million in FY2009, while its revenue slipped four percent to S$3.1 billion, from S$3.3 billion in the previous year.
Furthermore, CDL plans to market some 580 home units in four projects in the first half of this year.
Its home sales rose 13 percent to S$2.1 billion in 2010, compared to the 1,508 home units sold in 2009.
“Going forward, homebuyers, sellers and developers will take time to review the impact of the latest property measures,’ it said in a statement, citing the latest property measures implemented on 13 January.
Analyst Wendy Koh noted that CDL looks well-positioned to capitalize on any opportunities coming along.
“With its successful residential sales in last few years and recent divestment of non-core assets, CityDev’s net debt to equity ratio is at its lowest, at just 20 per cent, after taking into account fair-value gains on investment properties. The group has an outstanding cash balance of S$1.9 billion,” said Ms. Koh.