Headwinds will continue to batter CapitaLand’s core operating markets, say analysts

It’s had to slash prices to boost sales volume.

CapitaLand is bracing for a cold winter, as real estate headwinds continue to batter the company’s core operating markets Singapore and China.

According to a report by RHB, the company expects the Singapore property market to remain subdued in the near term with prices slowly crumbling over the next few quarters.

Moreover, while CapitaLand managed to sell almost triple the number of units in 1H16, this came at the expense of slashing prices for some projects by around 10%-15%. As a result, the company’s margin dropped to 8.9%, from 1H15’s 12.7%.

RHB further revealed that going forward, CapitaLand’s strategy will be to de-risk its residential portfolio and redeploy capital into higher-yielding assets. On the flip side, demand for the company’s newly-launched “stay-then-pay” scheme has been robust, and is expected to drive sales volumes in the second half of 2016.

In terms of its China properties, CapitaLand’s Tier-3 shopping malls performed weakly, as weak demand and raised supply dragged down reversion to -0.3%.