City Developments calls for curbs review as earnings drop

[SINGAPORE] City Developments Ltd, Singapore's second- largest developer, called on the government to review property curbs "as soon as possible" after home prices dropped for an eighth consecutive quarter, matching the longest losing streak in 13 years.

Home prices continue to decline across all market segments, City Developments said in its earnings statement late Thursday. Demand for residential units, especially at the high end, remains tepid, while sales continue to be adversely impacted by the various government cooling measures, rising interest rates and concerns over the local and global economies, the developer said.

City Developments' group attributable profit after tax and non-controlling interests slid 16 per cent to S$106.4 million in the quarter ended Sept 30. The group will continue to monitor market conditions carefully before it starts marketing its new condominium project Gramercy Park near the city's shopping belt of Orchard Road. The shares slid 0.7 per cent to S$7.66 at 1:56 pm in Singapore trading, extending this year's drop to 26 per cent.

"Headwinds continue to dominate both domestically and globally," City Developments said in the statement accompanying the earnings. "Markets remain highly sensitive, unpredictable and challenging. The Group continues to hold the view that the property cooling measures need to be reviewed as soon as possible, given that the home-ownership rate in Singapore is over 90 per cent."

The government began introducing residential property curbs in 2009 as low interest rates and demand from foreign buyers raised concerns that the market was overheating. They have included a cap on debt repayment costs at 60 per cent of a borrower's monthly income, higher stamp duties on home purchases and an increase in real estate taxes. Prices fell about 4 per cent last year, the first annual decline since 2008.

The deterioration in economic sentiment, a worsening supply-demand imbalance and rising vacancy rates risk precipitating a downward spiral in property prices, Augustine Tan, the president of the Real Estate Developers' Association of Singapore, said in September. The property cooling measures, in the current tone and intensity, could increase the risk to the real estate market and the economy, he said.

Singapore home sales dropped to their lowest this year in September as developers marketed fewer projects. Developers sold 341 units compared with a revised 513 units in August, according to data from the Urban Redevelopment Authority.

BLOOMBERG