Singapore’s red-hot housing market has pushed City Developments Ltd (CDL), Singapore’s largest non-government-backed developer, to the brink of running out of available properties to sell. CDL reported a 55 per cent drop in sales during the first quarter, attributed to a dearth of new homes following the rapid sell-out of its Copen Grand project. As a result, CDL has turned its attention to international acquisitions, including the recent purchase of the Sofitel Brisbane Central Hotel in Australia and the St. Katharine Docks complex in London. The company’s upcoming pipeline of projects in Singapore is focused on the mass market or mid-range developments to mitigate the impact of higher levies on foreign buyers or speculators.
CDL’s latest project, Tembusu Grand, experienced strong sales, with 56 per cent of units sold within the first month. However, the company indefinitely postponed the launch of its prime Newport Residences project due to the announcement of higher additional buyer’s stamp duty (ABSD) rates. Despite the cooling measures, CDL remains optimistic about the mass and mid-tier segments, where local buyers and permanent residents are the primary markets. Other developers have also witnessed robust sales, such as EL Development’s Blossoms by the Park project and the Hup Realty and Sunway Developments joint venture, indicating resilience in the market.
While CDL expects the luxury sector to be impacted by the ABSD hike*, it anticipates minimal disruption to its overall business. The company has strategically focused on the mass and mid-tier segments, which comprise most of its remaining landbank and inventory. Vijay Natarajan, RHB’s residential property and REIT analyst, believes CDL will continue to achieve stable returns, citing its diversified portfolio and substantial sold list.
Despite Singapore’s recent market restrictions, CDL acknowledges the importance of diversifying geographically and avoiding excessive reliance on a specific country or asset class. The company remains committed to expanding its overseas holdings while maintaining stability and embracing growth through its various business segments.
As Singapore’s housing market faces challenges, CDL and other developers are adapting their strategies to navigate the changing landscape and find growth opportunities.
*ABSD stands for Additional Buyer’s Stamp Duty. It is a measure implemented by the Singaporean government to regulate the property market. ABSD is an additional tax imposed on top of the standard buyer’s stamp duty. It applies to specific categories of property buyers, such as foreign buyers and investors and Singaporean citizens purchasing a second or subsequent residential property. The ABSD rates vary depending on the buyer’s profile and the number of properties they own. The recent ABSD hike raised the rates for foreigners purchasing residential properties from 30 per cent to 60 per cent, aiming to cool down the high-end luxury property segment and curb speculation in the market.