CDL

CITY Developments Ltd (CDL), which yesterday reported a 49.6 per cent year-on-year drop in group net profit for the first quarter ended March 31, 2009 to $83.1 million, said that property market sentiment is improving and it is ‘confident of remaining profitable for the current year’.

The group reported weaker earnings for property development and hotels, but this was mitigated by a higher profit from rental properties.

The bottom line was better than that of any other listed Singapore property group so far this reporting season, though below most analysts’ expectations.

The group said that it has fast-tracked its new condo project on the former Hong Leong Garden Condominium site in the West Coast area. The plan is to prepare the project, which will have an estimated 394 units, for launch by Q4 this year to ride on a recovery in the mass and mid-market residential segments.

The group is also doing the groundwork to prepare other development sites that are likely to be well received by potential buyers, so it will be ‘well-positioned to reap first-mover advantage, when the market recovers further’.

Q1 profit before income tax – including CDL’s share of after-tax profit of associates and jointly-controlled entities – fell 55.7 per cent for property development and 59.8 per cent for hotel operations, but this was offset by a 46.6 per cent rise for rental properties.

‘The strong performance of the rental properties segment is because office rental leases are secured for a longer period of time and the group also benefited by having a diversified tenant mix and locking in higher rental rates from leases that were up for renewal when the office market was more buoyant,’ CDL said.

Profit from rental properties, at $36.9 million in Q1 2009, overtook earnings from hotel operations, $20.9 million, reflecting the weaker Q1 performance posted earlier by Millennium & Copthorne Hotels and CDL Hospitality Trusts amid the global hospitality slump.

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