Despite stepping up its overseas expansions and investments, City Development Limited (CDL)’s diversification strategy will unlikely plug the decline in its core Singapore market in the near term, said Barclays in media reports.
Notably, CDL has diversified into China, UK, Japan and, potentially, Australia.
It recently acquired six freehold properties in the Greater London area for £157 million (S$326 million), on top of three ongoing projects in China acquired since 2010. CDL also partnered with a US-based investment company to purchase a prime freehold site in Tokyo (pictured) for 30.5 billion yen (S$355.5 million). In its 2013 results, the company also revealed plans to seek opportunities in Australia.
Barclays noted while it expects the diversification efforts to bolster the company’s growth prospects in the medium term, it will not be enough to make up for the decline posted in the Singapore market.
Singapore home sales dropped 52 percent year-to-date, while prices declined 3.9 percent from its peak in Q3 2013.
In fact, “several CDL projects, such as Commonwealth Towers, The Venue Residences, and its high-end properties, have not performed well since 2013 and we do not expect this to change in the near term,” Barclays said.
“We expect CDL’s skinny launch pipeline in the next 12 months to translate into lower profit recognition.”
Image source: CDL
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
