Property prices may soon drop

SINGAPORE: The head of Singapore's second-largest developer said property prices in the Republic could drop by three to five per cent this year.

City Development's billionaire chairman, Kwek Leng Beng, gave this assessment as his company announced a record pre-tax profit of more than S$1 billion for 2010.

Housing unit prices in Singapore could experience a small drop this year because of the government's latest property cooling measures, which include a steep stamp duty on sellers.

Mr Kwek said a price correction will be a good opportunity for buyers to re-enter the market - especially for properties on Sentosa island, home to one of Singapore's two integrated resorts (IRs).

"I believe the volume will go down to some extent. The prices will not plunge. The prices, depending on where, may be down three to five per cent," Mr Kwek said.

"But the volume will be down to some extent. But that is an opportune time for you to consider buying, in my opinion. And the best place to buy is Sentosa because there's no more land for sale.

"There are plenty of developers offering units for sale in Sentosa. And Sentosa, with the IR, is becoming more and more popular."

Mr Kwek said Singapore will continue to be an attractive market for property investments. Last year, developers sold a total of 16,292 units in Singapore.

But he said that if the economy continues to grow strongly and property prices do not drop, the government may step in with fresh cooling measures.

"I think this time, the measures introduced (by the government) are much more effective than before," Mr Kwek said.

"They are also keeping a watchful eye to make sure that the bubbles will not build up to such an extent that eventually the market will not be sustainable. It has ramification for all - especially the buyers. In many ways, we welcome the measure.

"If there is a temporary slowdown, so be it. We have to accept the fact that even real estate businesses is cyclical in nature.

Despite the likelihood of slowdown in the property market, CDL said it is confident it will remain profitable in the next six to 12 months.

For the full-year ended December 31, CDL's pre-tax profit rose 24.1 per cent to S$1.03 billion or US$804 million - a record since the company started operations in 1963.

Higher earnings were led by hotel operations and property development.

But its full-year revenue was down 4.4 per cent to S$3.1 billion.

Last year, CDL sold 1,560 units valued at S$2.1 billion or US$1.6 million. This was higher than the 1,508 units sold in 2009.

The company said it plans to launch 580 units in the first half of this year in properties such as the H2O Residences and Buckley 9 and 11.

The company's board has recommended a total dividend payout of 18 cents per share.

CNA/wk

[ By Millet Enriquez | Posted: 24 February 2011 2127 hrs ]