The weakest link: Capitaland’s residential property sales plunged 91% in Q3

Year-to-date sales value plummeted 80% to just $444m.

The lacklustre local residential property segment continued to be the weakest performer in Capitaland’s Singapore business in the third quarter.

Capitaland only sold 42 units last quarter, down 91% year-on-year from 468 units in 3Q13. Twenty of the units sold were located at Sky Habitat in Bishan, which was 68% sold by the end of the quarter.

Cumulative year-to-date residential property sales fell 79% to 237 units, while year-to-date sales value plunged 80% to $444m.

On the bright side, office rents continued its uptrend while residential sales languished. According to Barclays, the Grade A office average rent rose 3.3% quarter-on-quarter to S$10.95psf by the end of september. The pre-leasing of CapitaGreen has also been progressing well, with 279,500sf or 40% of space already pre-committed, up from 23% at the end of June.

Capitaland’s operating profit came in at $130m, up 37% year-on-year but down 5% quarter-on-quarter. Barclays notes that the year-on-year improvement was mainly from the higher contribution from shopping mall business, development projects in China and Vietnam and lower finance costs.

Revenue fell 4% year-on-year to $918.9m due to lower value of units handed over in China, but the decline was partially mitigated by higher revenue recognition from Singapore development projects including Sky Habitat and Sky Vue, and higher rental income from CCT, as well as Bedok Mall and Westgate.

“Despite slow properties sales in the current markets, management remained positive on the long-term outlook for Singapore and China market. CAPL will continue to optimize the balance sheet by capital recycling and is on track to achieve its 8-12% ROE target in the next 3-5 years. We continue to like CAPL’s diversified property portfolio and expect the recent privatization of CMA to provide more flexibility,” noted Barclays.