CDL reports operational improvements but is wary of Covid-19 impact
Singapore
CITY Developments Ltd (CDL) said that there are signs of improvement across its core business segments, but the prolonged Covid-19 pandemic remains a concern as it continues to adversely impact operations.
CDL and its joint venture (JV) associates sold 319 units with a total sales value of S$513.6 million in the first quarter of 2021 ended March 31, a 72 per cent increase from a year ago, it said in an operational update on Wednesday. The sales this quarter were spread across various property categories, CDL added.
In the same period last year, it sold 185 units with a total sales value of S$278.1 million.
In February, its residential project The Tapestry obtained its temporary occupation permit.
Beyond Q1, CDL also launched luxury development Irwell Hill Residences in April, located near the upcoming Great World MRT station and Orchard Road, at an average selling price of S$2,700 per square foot. Over 50 per cent of the project were sold over the launch weekend; to date, 60 per cent of units have been sold.
In May, CDL and its JV partner MCL Land were awarded a site at Northumberland Road through the first government land sales for tender this year, for its top bid of S$445.9 million or S$1,129 per square foot per plot ratio.
CDL said it will be developed into a mixed-use project with 408 residential apartments of up to 23 storeys and commercial retail space on the ground floor.
Abroad, domestic demand in Australia increased sales across the group's projects.
As at March 31, the committed occupancy of the group's Singapore office portfolio remained resilient at 91.4 per cent, coming in above the island-wide occupancy of 88.1 per cent, with positive rental reversion as average expiring rents are still below market levels.
CDL noted that the portfolio was supported by medium- to long-term leases with a diversified pool of mainly blue-chip multinational corporations.
The group focused on active engagement of office tenants to achieve renewals ahead of lease expirations, as companies remain cautious of expanding and relocating in view of restricted capacity at workplaces.
In Singapore's retail, as at the end of Q1, the committed occupancy for retail space remains strong at 92.1 per cent, above the island-wide occupancy of 91.5 per cent, CDL reported.
Gross turnover sales of the group's malls remained strong in Q1, increasing 5 per cent year on year. However, footfall was still lower than pre-Covid-19 levels, as the portfolio continued to face headwinds with new norms and capacity constraints for retail and F&B (food and beverage) sectors. The group said it continued to stimulate consumer spending in its malls through marketing support.
In its hotel portfolio, global occupancy dropped to 36.8 per cent from 52.5 per cent the same time last year, and global RevPAR (revenue per available room) decreased by 51.7 per cent to S$44.60, down from S$92.40 last year.
Restrictions on international travel and spikes in Covid-19 cases have been dampening recovery, but these are mitigated in Singapore by the government quarantine business and domestic staycations.
The United Kingdom has been severely impacted by a national lockdown and the United States saw a gradual reopening with vaccine roll-outs.
The group said it remains focused on cost containment, operational efficiency and digital marketing strategies to reduce cash burn and drive domestic demand.
In China, the group has seen a gradual return in office leasing demand, despite continued caution among tenants; it continued to observe stable occupancy and healthy leasing demand for its residential rental apartment portfolio In Japan.
However, in Thailand, CDL has temporarily closed part of Jungceylon, its major retail mall, to reduce operational cost, and is waiting for the Covid-19 situation to improve before reopening.
Meanwhile, CDL has been planning to list a real estate investment trust (Reit), and has been working with DBS and OCBC on the planned Reit initial public offering (IPO), Bloomberg News reported last year.
Qatar Investment Authority (QIA) is in talks to inject HSBC Holdings' London headquarters building into the planned property trust being listed by CDL, according to people with knowledge of the matter.
They added that the potential deal, which is still undergoing deliberation, would boost the value of the Reit portfolio to £1.8 billion (S$3.46 billion) from £600 million.
QIA and CDL aim to raise £500 million from an IPO of the sterling-denominated Reit, the people said, adding that it could take place in Singapore as soon as the third quarter of this year.
Overall, CDL said that 2021's outlook remains unpredictable, but it is prepared to navigate business disruptions across operations.
On Wednesday, shares of the mainboard-listed company closed at S$7.39, down S$0.14 or 1.9 per cent.
