No sale: Property developer Ho Bee Land didn’t sell a single unit last quarter

The high-end property market carnage continues.

Ho Bee Land is known for its high end condos in ritzy addresses like Sentosa with developments such as the Turquoise. Yet in this market, the big spenders are not coming out and the company didn’t record a single sale of a new property during the first quarter of this year.

It shows just how bad Singapore’s high end luxury property market is. CIMB Analyst Tan Xuan told Singapore Business Review the lack of sales was expected but that it’s a concern and shows the problems with selling high-end properties and Sentosa properties in particular. She added that Ho Bee has decided to rent out units in Sentosa rather than sell them, a trend that has been ongoing for some time.

Naturally the results are bad, and were below even the pessimistic expectations.

Ho Bee Land w 1Q14 revenue and PATMI dropped 72% and 92% yoy, respectively, as there were no units sold during the quarter, and thus no recognition of revenue for development properties, noted CIMB’s Tan.
The rental income from industrial and commercial properties increased by 495% yoy and contributed to 93% of revenue, largely from its office buildings, The Metropolis in Singapore and Rose Court in London. Residential properties’ rents accounted for the remaining 7%.

We expect rental income to underpin FY14-15 earnings, specifically from The Metropolis and the two commercial buildings in London. Additionally, its rental income should improve in the coming quarters as more tenants move into The Metropolis (94% committed) and the recently acquired commercial building in London at 1 St Martin’s Le Grand starts contributing. 

Overseas developments to contribute to earnings from FY15. Management has demonstrated foresight in increasing its exposure to investment properties ahead of weak development income. The overseas developments in Australia and China acquired over the past three years should start contributing meaningfully to earnings in 2015-16.