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Bukit Sembawang Estates blames pandemic for serviced-apartment impairment loss

BUKIT Sembawang Estates recently booked a much higher impairment loss on its serviced apartments because of market uncertainty in this segment, the board said on Tuesday.

In a board filing, it pointed the finger at the ongoing coronavirus pandemic, which it said has led to uncertainty and affected the market for serviced apartments.

Mainboard-listed Bukit Sembawang recognised an impairment loss of $44.1 million on Fraser Residence Orchard, Singapore, in its latest financial year, up from S$9.7 million before. That brings the impairment loss on the serviced apartment units to S$53.8 million altogether.

The Singapore Exchange had asked the developer to explain its most recent impairment loss, which was recorded in its financial statements for the 12 months to March 31, 2020.

Fraser Residence Orchard, Singapore, was worth some S$205.1 million, based on an independent valuation by Edmund Tie and Co, Bukit Sembawang’s board noted in its reply. The valuation, based on a discounted cash flow calculation, assumed that the property had a discount rate of 4.5 per cent and a terminal yield rate of 3 per cent.

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But Bukit Sembawang added: “Like the financial market, the real estate market is being impacted by the uncertainty that the Covid-19 outbreak has caused… The value assessed herein may change significantly and unexpectedly over a relatively short period of time.”

The counter added S$0.04, or 1.03 per cent, to S$3.92 on Tuesday, before the latest update.

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