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It breaks ground on its first development in the country - an $84m integrated complex

HO CHI MINH CITY - SINGAPORE developer GuocoLand Group yesterday broke ground on its maiden development in Vietnam - The Canary - and says it is already on the lookout for further development sites.

The US$58 million (S$84 million) investment in The Canary reflects a high level of investor confidence in Vietnam’s booming economy, said a Singapore agency official at the ground-breaking ceremony yesterday.

The 17.5ha development will boast residential, commercial, hotel and educational facilities. It is the first integrated project to be built by a foreign investor in Vietnam, outside the commercial centre Ho Chi Minh City and the capital Hanoi.

It is being built in affluent Binh Duong province, 17km north of Ho Chi Minh City, near the Vietnam- Singapore Industrial Park (VSIP).

The flagship industrial zone was started in 1996 by a consortium of five Singapore firms led by SembCorp Parks, in a venture with Vietnamese state-owned Becamex IDC.

With a gross floor area of 290,000 sq m, The Canary is expected to yield 1,200 homes, in addition to a shopping mall with 85,000 sq m of retail space, a hotel, an international school and a sports complex. Homes will also face the popular 27-hole Song Be golf course.

Centre director Chiong Woan Shin of IE Singapore’s Ho Chi Minh City office told The Straits Times that the project reflects the level of confidence of Singapore companies.

Construction of the residential area’s first phase is under way and due for completion in 2009.

The two- to four-bedroom apartments, ranging from 85 sq m to 160 sq m, will be targeted at locals and expatriates alike, said Mr Lawrence Peh, general manager of Guoco- Land Vietnam.

GuocoLand’s international investment general manager Ho Sing added that the group is looking for more locations in Vietnam for further projects.

CBRE Vietnam’s managing director, Mr Marc Townsend, said he expected the project to be well-received. ‘With so many people working at the VSIP, it will be time- and cost-efficient to live there,’ he said.

The project will be launched for sale next year. He estimates that the homes will be priced at a premium above US$800 per sq m, or S$108 per sq ft - a price fetched by a residential project nearby.

IE Singapore’s Ms Chiong added that more Singapore companies were venturing into Vietnam.

But fast-rising home prices are also proving to be the bane of ordinary Vietnamese and even some expatriates. This is exacerbated by speculators flipping properties for a quick profit.

Property prices have jumped 50 per cent in Vietnam since the start of this year, and in Hanoi and Ho Chi Minh City, they have tripled.

The result is that owning homes in the cities is far beyond the means of most ordinary Vietnamese. The issue is a hot topic in the country’s legislature.

Source : Straits Times - 21 Nov 2007

Nine-month profit soars 128.5% to $490m; record full-year profit seen.

CITY Developments Ltd (CDL) looks headed for record profits for full-year 2007 after achieving net earnings of $169.5 million for the third quarter ended Sept 30, and $490 million for the first nine months. Third-quarter earnings were up 32.1 per cent and nine-month earnings 128.5 per cent from the corresponding periods last year.

Market watchers reckon that for the full-year, the property and hotel group should be able to surpass its best showing of over $500 million net earnings about a decade ago.

On the group’s prospects, CDL said yesterday: ‘With the outstanding sales achievements over the past few years, this has enabled the group to lock in its profits, placing it in a rewarding position to perform well in the next few years as profit will continue to be recognised progressively.’

CDL executive chairman Kwek Leng Beng said that ‘continued capital appreciation in the next few years is likely and the prospects for the property sector continue to be good’.

In the first nine months, the group sold 1,590 homes with sales value of $2.9 billion. The group is planning to launch a few residential projects in the coming months, including the 40-unit Wilkie Studio in the Mount Sophia area, the 77-unit Shelford Suites off Dunearn Road and a 228-unit condo on The Quayside Collection site at Sentosa Cove. Another project in the pipeline is a 336-unit condo at the former Lock Cho apartments site on Thomson Road.

Despite the initial ‘knee-jerk’ impact on market sentiment following the withdrawal of the deferred payment scheme, Mr Kwek highlighted that ‘the fundamentals in the economy and property market in Singapore remain very well-founded and strong’ and ‘there is still room for sustained growth’.

Office rentals are still improving and the rental market for the next two to three years looks strong. ‘Several key leases are up for renewal next year and beyond and this will significantly enhance rental yields,’ he said.

The group has a size-able commercial portfolio of 4.3 million sq ft lettable area, which offers it several options. However, as many of CDL’s office buildings have a low historical cost, and given the group’s strong balance sheet, ‘there is no immediate urgency to monetise this commercial portfolio even though there is a market trend to recycle capital’, Mr Kwek said.

The group’s strategy of maintaining a land bank helps CDL respond quickly to changing market demands, to create value for its shareholders in the mid to long term without the need to bid aggressively for new sites. CDL’s current land bank can be developed into 9.12 million sq ft gross floor area.

CDL’s 32.1 per cent improvement in Q3 earnings was achieved despite last year’s third quarter being buoyed by $150.9 million one-off divestment gains from the sale of its long leasehold interest in four Singapore hotels to CDL Hospitality Trusts.

For the first nine months, profit before income tax from property development was $385 million, up 165 per cent from the corresponding year-ago period, with contributions from projects like City Square Residences, Tribeca, Monterey Park, St Regis Residences, The Sail @ Marina Bay, The Oceanfront @ Sentosa Cove, Parc Emily, Edelweiss Park, Residences @ Evelyn and Botannia Residences.

The group is expected to begin booking profits from The Solitaire from Q4 2007, while profits from One Shenton and Cliveden at Grange will only be recognised in stages from next year onwards.

Profit from rental properties in the first nine months jumped from $8.3 million to $44.6 million.

Other listed property groups also continued reporting improved earnings for the quarter ended Sept 30, 2007 on the back of fair-value gains on investment properties, strong residential sales and their ability to progressively recognise earnings on units sold based on the percentage of project completion.

Like CDL, many groups can be expected to post record earnings for full-year 2007. CapitaLand’s net earnings for the first nine months more than tripled to $2.08 billion - double the $1.018 billion record for the whole of last year.

Analysts say next year developers should still be able to book strong residential development profits from progressive recognition of profits for units already sold. However, a critical factor that could affect their bottom lines is office valuations.

Source : Business Times - 15 Nov 2007

Threefold increase on buoyant energy, real estate markets.

MAINBOARD-LISTED engineering group Boustead Singapore reported a more than threefold rise in half-year earnings, thanks to buoyant energy and real estate market conditions.

The company yesterday unveiled a first-half net profit of $26.0 million, a 227.2 per cent jump from the $7.9 million it earned during the April-September 2006 period.

This was achieved on the back of a 47.6 per cent jump in revenue to $206.2 million, from $139.7 million last year.

The company said that with this latest set of financial results, it was confident of achieving a sixth consecutive year of revenue and net profit growth. Boustead is proposing an interim tax-exempt cash dividend of three cents per share, a 50 per cent rise over the payout last year.

The star performer was its energy-related engineering division, whose revenue grew 37 per cent to $66 million as demand for its engineering services boomed amid record high global oil prices. The company clinched a slew of new energy projects across Africa, Asia, Europe and South America during the period.

Meanwhile, its real estate solutions division grew strongly in the wake of a boom in the Singapore construction industry. The division’s revenue shot up 76 per cent to $90.3 million, as Boustead secured several sizeable contracts, including two industrial leasehold property contracts. It also sold an industrial leasehold property in Singapore for $12.4 million.

Boustead also clinched a $300 million township construction deal in Libya during the first half. Revenue and net profit from this contract will flow in during the second half.

Boustead’s wastewater engineering division chalked up a 113 per cent leap in revenue of $16.0 million. But stiff competition, low barriers to entry, and delays in clinching new contracts means that this unit’s turnaround would be delayed beyond FY2008, the company said.

Geo-spatial technology registered steady, albeit marginally slower, revenue growth of 4.5 per cent. Overall, Boustead’s cash reserves grew by another $8.1 million to reach $127.5 million.

Wong Fong Fui, group chairman and chief executive officer, expressed satisfaction with the overall results.

‘With the exception of the water and wastewater engineering division, the strong revenue and net profit performance of our key divisions helped us post very commendable net profit growth. We expect our energy-related engineering, real estate solutions and geo-spatial technology to underpin continued growth in second half of FY2008.’ He expressed confidence that his company would register its sixth consecutive year of strong revenue and profit growth this year.

Source : Business Times - 15 Nov 2007

NET profit for Hotel Properties Ltd (HPL) jumped to $15.2 million for the third quarter ended September, from $10.8 million for the corresponding period last year.

Q3 revenues increased 45 per cent from $76.3 million to $110.4 million.

‘The increase was mainly attributable to the group’s hotels and resorts in Maldives, Bali and Singapore,’ said HPL.

‘The group’s two Four Seasons Resort in Maldives commenced business in the last quarter of 2006 and the hotels and resorts in Bali and Singapore experienced strong growth in both occupancy and room rates.’

HPL incurred higher borrowings and finance costs during Q3 because of various acquisitions by way of investments in associates and a joint-venture company. These include its participation in en bloc purchases of Gillman Heights and Farrer Court sites in Singapore.

It also bought a 20 per cent stake in a residential project in Hong Kong and a 50 per cent interest in a company in Thailand to develop a luxury hotel in Phuket.

HPL expects to do well for the rest of the year as the demand for hotel accommodation is likely to stay strong.

Source : Business Times - 15 Nov 2007

CITY Developments (CDL) executive chairman Kwek Leng Beng believes that Singapore’s property market is likely to remain healthy and that there is still room for sustained growth.

‘Continued capital appreciation over the next few years is likely, and the prospects for the property sector continue to be good,’ said Mr Kwek yesterday.

Shareholders would have beamed at his optimistic outlook, but some were left scratching their heads wondering when the company, flush with cash, would utilise its outstanding Section 44 tax credits.

CDL is among several big companies that still have unused tax credits, which expire on Dec 31.

On Tuesday, Hong Leong Finance announced a special dividend to partially utilise its outstanding credits.

And Singapore Computer Systems has announced an interim dividend of three cents and a special dividend of one cent per share - the first time the company has given a dividend in two years.

Still, tax credits aside, investors cheered a strong performance by South-east Asia’s second-largest developer, which released its third-quarter results yesterday.

Net profit for the three months ended Sept 30 rose 32 per cent to $169.5 million, compared with $128.3 million in the corresponding period a year ago.

Aided by strong luxury-home sales in Singapore, revenue shot up 19.7 per cent to $796 million last year.

Earnings per share for the quarter rose from 14.1 cents to 18.6 cents, while net asset value per share rose to $5.51 as at Sept 30 from $5.21 as at Dec 31 last year.

While Mr Kwek acknowledges that the withdrawal of the deferred payment scheme for property purchases has had an initial ‘knee-jerk’ impact on market sentiment, he expects confidence and buying interest to return.

‘The high-end property market, having reached record highs, is likely to see a more judicious growth,’ he said.

Singapore’s position as a growth hub in the Asia-Pacific will augur well for the property market, he added.

The group’s total land bank stands at 4.48 million sq ft, with a gross floor area of 9.12 million sq ft.

Source : Straits Times - 15 Nov 2007