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CapitaLand profit leaps to $2.76b on gains in key markets

Firm says volume for home sales could ease in the short term, but should pick up again by year-end

PROPERTY giant CapitaLand tips that home prices will increase by 5 per cent to 10 per cent this year, despite the cautious mood that has taken hold in recent months as many buyers stick to the sidelines.

The group, which announced a net profit of $2.76 billion yesterday, added that sales volume could moderate, although prices should hold up.

It said it faces challenging times in the near term due to the United States sub-prime crisis and the global credit crunch it has spawned.

‘In the first half, we will see a bit of headwind,’ president and chief executive Liew Mun Leong said in a results briefing, ‘but by yearend…, the situation in the residential market here will improve.’

Chairman Richard Hu underscored that view.

‘The current weakness in the US housing market and economy and tight credit environment will likely cast a cloudy outlook over the general economic and business conditions for at least the first half of 2008,’ he said.

CapitaLand said its cash reserves of $4.4 billion and low gearing had placed it in a good position to capitalise on opportunities that could arise during this period.

It is well-placed largely because of a net profit of $2.76 billion last year – almost three times the previous year’s $1 billion.

South-east Asia’s largest real estate company said the sparkling numbers were achieved on the back of sterling performances in its key markets of Singapore, China and Australia.

It also benefited from revaluation gains. The surge in prices last year, particularly in the Republic, led to the group recognising revaluation gains of some $1.1 billion from its investment portfolio.

Boosted by a $136.8 million revaluation gain, fourth-quarter earnings hit $674.7 million from $453.5 million a year earlier.

Full-year revenue reached $3.79 billion, up from $3.15 billion year-on-year.

Singapore accounted for 61 per cent of the group’s earnings before interest and tax last year from 51 per cent a year ago.

Earnings per share for the full-year rose to 98.6 cents from a restated 36.6 cents a year ago. Net asset value per share was at $3.54 at the end of last year, up from $2.65 a year earlier.

The group acquired 4.37 million sq ft of land last year, bringing its total pipeline to 5.5 million sq ft of gross floor area.

It sold 1,430 homes worth more than $3 billion in Singapore – making it the largest listed seller here – as well as about 2,000 homes in China.

Unlike some developers, CapitaLand, which has little stock of unsold homes, will not delay its residential launches in Singapore this year. It plans to launch 800 to 1,000 units this year, including 130 units of its high-end condominium Latitude in Jalan Mutiara and 70 units of its luxury condo on the Silver Tower site in Cairnhill in the first half of the year.

Some units in Latitude were sold at a preview last year for $2,494 to $2,829 per sq ft, based on caveats lodged.

Early next year, CapitaLand will launch a 99-year leasehold condo with an estimated 1,500 units on the Farrer Court collective sale site. The firm said yesterday it would be designed by award-winning architect Zaha Hadid.

Mr Liew said Singapore’s evolution into a global city was behind the surge in property prices, marking this boom out from one in the mid-90s when domestic factors were the driver.

Nevertheless, for this year, residential demand will be driven mainly by steady new household formation and demand from buyers displaced by collective sales, he said.

CapitaLand’s assets under management reached $17.7 billion last year.

Source: The Straits Times 23 Feb 08


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