CDL weighs redevelopment options amidst Q2 profits slip

Potential targets include Fuji Xerox Tower and City House.

CityDev is actively evaluating redevelopment opportunities within its portfolio in a move that comes after a dismal Q2 performance that reversed the profit gains it achieved the previous quarter, according to analysts. 

Potential redevelopment targets include Fuji Xerox Tower and City House which may qualify for the CBD Incentive Scheme under the Urban Redevelopment Authority’s 2019 Draft Master Plan, OCBC Investment Research said in a report. Liang Court and Central Mall also pose redevelopment possibilities for the company.

CDL is also intending to carry out a small-scale asset enhancement initiatives for W Hotel. It earlier acquired 62.5% interest which it does not already own in the non-residential components of PPS 1, which comprise W Singapore (Sentosa Cove and Quayside Isle).

The move comes after CDL profits crashed 26.4% to $162.4m in Q2 due to lower gross profit generated by the property development segment where revenues fell to $287m from $819m in the previous year.

Also read: CityDev's massive unsold landbank is key target for cooling measures

Despite a challenging market, the company’s high-end new launches like Boulevard 88, Amber Park and South Beach Residences saw high take-up rates due to foreign buying activity. Hotel operations are also stabilising and overseas sales in China are improving, Jefferies analyst Krishna Guha said in a report. “The group currently has 345 unsold units in its inventory while future launch pipeline consists of 564 units. Group will be opportunistic in future land banking in Singapore,” he added. 

“We lower our net income estimate by 1% and 9% for FY19 and FY20 respectively. This is driven by lower revenue from the property development segment,” Guha added.