The boss of Singapore's largest developer CapitaLand believes the local private residential property market may be bottoming out.
The company's president and chief executive Lim Ming Yan told Bloomberg TV he had detected signs private home prices were doing so after years of price falls. But he added: "For a rebound to take place on a more sustainable basis, there has to be overall improvements in the fundamentals."
Separately, as he unveiled strong financial results, Mr Lim said the company wants to be "a bit more aggressive in its approach" to the residential market here.
"We are prepared to be more aggressive but we remain disciplined," he said. "If you are hoping for a bargain purchase in the Singaporean residential market, then you will never get anything."
Mr Lim was speaking at the company's results briefing yesterday, responding to queries on CapitaLand's plans following its bullish - though unsuccessful - bid for a mixed-use site in Bidadari.
CapitaLand came in fifth in the tender, with a bid of $958.1 million, which works out to about $1,000 per sq ft per plot ratio (psf ppr). The site was awarded to a consortium linked to Singapore Press Holdings and Kajima Development for $1.132 billion, or $1,181 psf ppr.
"We are prepared to put our best foot forward in the Singapore residential market but we have to remain disciplined, because we still need to generate a reasonable level of return for our shareholders."
AT A GLANCE
REVENUE: $992.4 million (-12.3%)
NET PROFIT: $579.3 million (+97%)
Mr Lim said CapitaLand, which has about 43 per cent of its total balance sheet in China and 35 per cent here, has options in several markets including China and Vietnam.
"It is an issue of whether you still want to go into a project that has got a certain risk/reward profile, that may not be justified compared with many opportunities elsewhere."
He added that the group would be comfortable if its share of China assets rose to about 50 per cent.
The real estate firm's bullishness comes on the back of solid financial results. It posted a 97 per cent jump in second-quarter net profit to $579.3 million year on year, driven by divestments and revaluation gains. However, revenue for the second quarter dipped 12.3 per cent year on year to $992.4 million. This was attributed to lower contribution from development projects in Singapore, but mitigated by higher contributions from China projects.
About 95 per cent of its launched residential units in Singapore were sold as of July 31, including 57 per cent of the 124-unit Marine Blue launched in March.
Earnings per share for the second quarter was 13.6 cents, up from 6.9 cents a year earlier while net asset value per share was $4.16 as at June 30, up from $4.15 as at Dec 31.
Mr Lim said that while property transaction volumes are up and the rate of price decline has slowed, "there are a lot of mixed signals" in Singapore's residential market.
"There is still a lot of liquidity in the market looking for a home to park the money. This is very much something that is liquidity driven, very much capital market driven, so we have to look at all these, and we have to balance ultimately the risk-reward of investing in a project like this in Singapore," he said.
CapitaLand shares closed two cents lower yesterday at $3.74 after the results were released.