City Developments Limited


For the fourth quarter ended 31 December 2014 (Q4 2014), the Group posted a record attributable profit after tax and non-controlling interests of $384.9 million (Restated Q4 2013: $222.0 million), registering a significant increase of 73.4%. This was boosted by the completion of the sale of the present and future cash flows of the dividends and other shareholders’ distributions in its wholly-owned subsidiary, Cityview Place Holdings Pte. Ltd. (Cityview) which owns the W Singapore – Sentosa Cove, Quayside Isle and The Residences at W Singapore – Sentosa Cove. Accordingly, basic earnings per share of the Group increased by 75.5% to 41.6 cents (Restated Q4 2013: 23.7 cents) for Q4 2014.

For the year ended 31 December 2014 (FY 2014), the Group achieved its highest ever revenue of $3,763.9 million, up 17.1% from 2013. The Group’s profit after tax and non-controlling interests also increased by 12.2% to $769.6 million (Restated FY 2013: $686.2 million). Basic earnings per share stood at 83.2 cents (Restated FY 2013: 74.0 cents) for FY 2014.

The Group achieved more than $1 billion pre-tax profit for FY 2014. Profit contribution from the property development segment continued to be the highest for both Q4 and FY 2014. Pre-tax profit for this segment had increased by 46.9% and 28.8% respectively, following the completion of the sale of cash flows of Cityview, coupled with the maiden contributions from several projects namely D’Nest and Jewel @ Buangkok. In addition, the recognition of the entire profit from Blossom Residences Executive Condominium (EC) upon its completion in Q3 2014 had also contributed to the increase for FY 2014.

The hotel operations segment though second in place in terms of pre-tax contribution, delivered a strong performance. Pre-tax profit for this segment increased by 191.1% for Q4 2014 and by 43.7% for FY 2014. This was attributable to profit contribution from three newly acquired hotels, The Chelsea Harbour Hotel, Novotel New York Times Square and the Grand Hotel Palace Rome, and positive performance from recently refurbished hotels. Further, the sale of cash flows of Cityview also contributed to this segment.

The rental properties segment posted lower pre-tax profit for FY 2014 due to the absence of divestment gains from non-core investment properties recognised in FY 2013. The gains in 2013 were mainly from the sale of 100G Pasir Panjang and strata units in Citimac Industrial Complex, Elite Industrial Building I, Elite Industrial Building II and GB Building.

As at 31 December 2014, without considering the fair value surplus of the investment properties, the gearing ratio of the Group remained stable at 26.0% (Restated FY 2013: 25.0%). Its interest cover was at 12.1 times (Restated FY 2013: 13.7 times) for FY 2014.

In addition to final ordinary dividend of 8.0 cents per share, the Board is also recommending a special final ordinary dividend of 4.0 cents per share. Taking into account the special interim dividend of 4.0 cents paid in September 2014, the total dividends for 2014 amounted to 16.0 cents per share.

Based on advance estimates, Singapore’s economy expanded by 1.5% in Q4 2014 on a year-on-year basis (Q3 2014: 2.8%). On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 1.6% in Q4 2014 (Q3 2014: 3.1%).

For FY 2014, the Singapore economy expanded by 2.8%, compared with the 3.9% growth in 2013. This was at the lower end of Ministry of Trade and Industry’s (MTI) revised growth forecast of between 2.5% and 3.5% for 2014.

The construction sector grew by 0.8% on a year-on-year basis in Q4 2014, lower than the 1.3% growth in the previous quarter, reflecting the slowdown in the private sector.

Prices of private residential properties moderated downwards for five consecutive quarters. Urban Redevelopment Authority (URA) data indicated that prices fell by 4.0% in 2014 compared with the 1.1% increase in 2013. Residential Property Price Index (PPI) decreased to 205.7 points in Q4 2014 (Q4 2013: 214.3 points). Rentals of private residential properties also declined by 3.0% year-on-year in 2014, a reversal from the 0.9% increase in 2013 on the back of new supply coming onto the market.

According to URA data, developers sold only 7,316 private residential units (excluding ECs) – a significant drop of 51.1% in 2014 (2013: 14,948 units sold). If ECs are included, developers sold 8,894 units – a fall of 52.0% (2013: 18,536 units sold).

In general, property consultants share the view that sentiment will remain negative in 2015, with private home sales volume expected to hover around 7,000 to 8,000 units.

Despite the tough market conditions, the Group, together with its joint venture associates, sold 1,378 units, including ECs, at a value of about $1.4 billion, maintaining the Group’s position as Singapore’s top-selling private sector developer for 2014 (2013: 3,210 units with total sales value of $3.32 billion).

During the year under review, the Group successfully launched two new joint venture projects in May. The 944-unit Coco Palms at Pasir Ris Grove, is near Pasir Ris MRT station and White Sands Shopping Centre. To date, 80% of the project has been sold. The second development was the 845-unit Commonwealth Towers located adjacent to Queenstown MRT station. With its excellent city fringe location and strong transport connectivity, 85% of the 400 units released for sale have been sold to date. Coco Palms and Commonwealth Towers were respectively the first and second best-selling project for May in terms of sales volume. Coco Palms went on to top the best-selling list for 1H 2014.

For the period under review, profits were booked in from several pre-sold projects such as H2O Residences and Jewel @ Buangkok. Profits were also booked in from joint venture projects such as HAUS@SERANGOON GARDEN, The Palette, D’Nest, Bartley Residences, Bartley Ridge, The Inflora, Hedges Park and Echelon.

However, no profit was realised from Coco Palms and Commonwealth Towers as well as two fully sold EC projects namely, The Rainforest and Lush Acres.

For the office sector, URA statistics showed that the overall price index for office space increased by 4.5% in 2014 (2013: 5.2%). The overall rental index for office space shot up by 9.8% in 2014, a significant increase versus the 1.3% climb in 2013. The office rental index for the Central Area and the Fringe Area increased by 10.9% and 7.3% respectively.

Island-wide occupancy of office space at the end of 2014 moderated slightly to 89.8% (2013: 90.1%). The Group’s portfolio of office space continues to maintain high occupancy at 97.2%.

South Beach, the Group’s mega mixed-use joint venture development on Beach Road, topped-out its 45-storey South Tower (the taller of its two towers) on 2 December 2014. This tower will house a 654-room hotel, designed by famed Philippe Starck, named The South Beach. Offering a unique hospitality experience with a blend of the latest integrated technology and cool design elements, the hotel also has a large ballroom that can cater to over 500 guests, housed in a conserved building. The hotel will enjoy a symbiotic link with Suntec City Convention Centre, with connections built across and under the Nicoll Highway. The hotel General Manager has been appointed, the hotel management team is in place and staff recruitment is ongoing. The hotel is expected to soft open in April 2015, in phases.

The South Tower also houses The South Beach Residences, comprising 190 luxury apartments ranging from approximately 950 square feet (sq ft) for a 2-bedroom unit to over 6,500 sq ft for a 5-bedroom penthouse. Every unit will enjoy panoramic views of the Singapore skyline with stylish fitting and state-of-the-art furnishings. The penthouse will come with private swimming pools. It is expected to be completed in Q4 2015.

South Beach Consortium (SBC) has secured 80% of the leases for the 34-storey North Tower, offering 500,000 sq ft of Grade A office space. SBC is currently in advanced negotiations with potential tenants to take up the remaining 20%. This tower is expected to obtain its Temporary Occupation Permit (TOP) in Q1 2015. Tenants include numerous multi-national companies including Facebook Singapore Pte Ltd, which is the anchor tenant, occupying 70,000 sq ft of space. The first tenant is expected to commence operations in Q1 2015.

Other components of this integrated development such as the 29,000 sq ft South Beach Club and the retail space, are expected to complete in April 2015 and Q4 2015 respectively.

Overseas Platforms
The Group has been actively pursuing real estate development overseas as part of its diversification and expansion strategy.

CDL China Limited, a wholly-owned subsidiary of the Group, continues to develop its three projects. Eling Residences, a 126-unit luxury development located at the peak of Eling Hill in Yuzhong district, Chongqing, has completed all structural works up to the roof. In-situ show units are being completed and landscaping works on site have commenced. This Building and Construction Authority (BCA) Green Mark Platinum awarded project represents the first Green Mark Platinum rating accorded to a residential project in China. Subject to market conditions, the development is targeted for a soft launch in Q2 2015.

The mixed-use project at Huang Huayuan, also located in Yuzhong district, has made good progress both in excavation and retaining wall works. This development will comprise three high-rise residential towers, a 150-room hotel and a mall.

Suzhou Hong Leong City Center (HLCC) is a sizable mixed-use development next to Jinji Lake in Suzhou Industrial Park district. The 462-unit residential tower and the 899-unit SOHO tower, both part of Phase 1, have obtained their respective sales permits and the sales gallery which has two showflats is ready. While the project has not been officially launched, it has garnered many enquiries from the local community and 60 units were transacted with eager buyers in Q4 2014. CDL China will continue to monitor the market conditions in Suzhou and will officially launch Phase 1 at the appropriate time. For Phase 2, the excavation and retaining wall works are progressing smoothly and are expected to be completed in Q1 2015. Phase 2 will encompass a 362-unit residential tower, a hotel with around 300 rooms, a retail mall and an office tower.

The Group recently gained a foothold in Shanghai in December 2014 via the acquisition of Shanghai Jingwen Zhaoxiang Real Estate Limited (Jingwen), a Shanghai residential real estate developer, for RMB 799 million. Jingwen’s completed 120-unit luxury residential development in Qingpu district’s affluent residential corridor is built on a 163,837 square metres (sqm) land parcel with lush, well-landscaped greenery. The project was completed in 2013 with total GFA of approximately 48,456 sqm. 85 units remain unsold. The project is undergoing a complete overhaul which will include physical renovations and landscape enhancement. Three new showflats will be built in addition to the two existing ones.

The Group is closely monitoring the market conditions in China and will adopt the appropriate strategies as required. While most cities have lifted the home purchase restrictions and also relaxed the loan restrictions, the market recovery is still uncertain and sales are expected to be muted, although some provinces have recorded more transactions.

The UK economy is experiencing above trend growth despite easing in the latter part of 2014. With UK growth for 2014 estimated at 2.6%, growth for the year was the best since 2007. Consensus Treasury forecasts growth of 2.6% in 2015 before easing to 2.4% in 2016.

London, with its politically-stable economy, will outperform the UK generally. Therefore, domestic and international demand for real estate is forecast to continue, leading to capital value growth. Meanwhile, growth in consumer spending is supported by falling oil prices. A note of caution is sounded about rising construction tender prices, but overall the prospects for real estate are positive.

Political events may have an influence in the medium term. A UK general election in May 2015, followed by the London mayoral election in 2016, may have some bearing on real estate. However, the Group expects the underlying strength of the economy to offer some protection from political risk, and it will continue to be diligent in the assessment of new investments. We have reason to be cautiously optimistic about the outlook for London.

Since the Group established its UK real estate platform in 2013, setting aside up to £300 million for investment, to date, it has acquired six prime freehold properties in UK, amounting to an investment of £157 million. These include two sites in Knightsbridge, one each in Croydon, Belgravia, Chelsea and Reading. All these sites are “off-market” deals and they comprise a multi-storey car park site, residential and investment properties.

The Group is planning to market its Reading, Belgravia, Chelsea and Knightsbridge projects in Q2 2015.

The Group, through its indirect subsidiary Pinenorth Properties Limited, has entered into a conditional sale and purchase contract with Haymarket Group Properties Limited to acquire the Teddington Studios land site for £85 million (approximately S$175.4 million based on an exchange rate of S$1 to £0.48). The acquisition is expected to be completed in 2H 2015, upon fulfillment of the contractual conditions. The site is strategically located on the banks of the River Thames in south-west London, in one of the prime residential areas of Greater London. This freehold land parcel measures 18,211 sqm (approximately 4.5 acres). Under the current approved planning permission, the Teddington site may be redeveloped into a luxury residential complex with 207 apartments and six houses, with secure underground car parking.

In September 2014, the Group seized an extremely rare opportunity to acquire majority interest in a prized freehold land site in Tokyo for 30.5 billion yen (approximately S$355.5 million). Located in the high-end, prestigious residential enclave of the Shirokane area in Tokyo’s Minato ward, where numerous foreign embassies are situated, the expansive 16,815 sqm land parcel includes a mansion, the former residence of Seiko’s founder, Mr Kintaro Hattori. The purchase of this landmark site in Japan marks the Group’s first foray into residential real estate development in this market and the Group plans to develop luxurious condominiums on this site.

Fund Management
The Group has also been attentively developing its funds management products as planned. In December 2014, the Group partnered with investment firm Blackstone’s Tactical Opportunities Fund and CIMB Bank Berhad, Labuan Offshore Branch, to create a unique investment platform that will invest in the cash flows of the Group’s high quality assets on Sentosa Cove, called the Quayside Collection.

The Quayside Collection comprises hotel, retail and residential components namely W Singapore – Sentosa Cove hotel, Quayside Isle, a waterfront F&B and retail property and the apartments of The Residences at W Singapore – Sentosa Cove. The investment instrument called Profit Participation Securities (PPS) will see investors receive a fixed payout based on 5% interest per annum for a period of five years, in addition to a participation in the cash flows over the period they hold the PPS.

The total aggregated value of PPS is $750 million, comprising $281 million subscribed by Astoria Holdings Limited, a wholly-owned subsidiary of the Group; with Blackstone Tactical Opportunities Fund investing $367 million and CIMB Bank Berhad, Labuan Offshore Branch contributing $102 million. Concurrently, two banks will provide $750 million in value of senior loan facilities.

The Group remains a substantial investor in PPS, reflecting its commitment and confidence in the long-term prospects for its Sentosa Cove assets. Through this transaction, a total of $1.5 billion was raised, enabling the Group to build and deploy capital for its global plans. The PPS demonstrates the Group’s capability to bring well-structured products that would create value for its shareholders and for its strategic partners.

Millennium & Copthorne Hotels plc (M&C), in which the Group holds a 61.0% interest, reported net profit after tax and non-controlling interests of £44.0 million for Q4 2014 (Restated Q4 2013: £147.0 million) and £110.0 million for FY 2014 (Restated FY 2013: £224.0 million). The decrease was largely due to the absence of significant revenue and profit from the fully-sold The Glyndebourne condominium project, which were recognised in FY 2013. Basic earnings per share for FY 2014 was 34.0p (Restated FY 2013:69.4p).

Excluding The Glyndebourne, M&C’s FY 2014 revenue increased by 3.8% to £820.0 million (Restated FY 2013: £790.0 million) and profit before tax was up 17.3% to £183.0 million (Restated: £156.0 million), driven by improved Revenue Per Available Room (RevPAR), mainly through acquisitions and hotel refurbishments.

RevPAR increased by 2.8% to £71.55 (FY 2013: £69.58), or by 6.9% in constant currency. M&C’s refurbishment programme also benefitted hotel revenue through the return of renovated rooms to the inventory, as well as higher average room rates, especially at Millennium Hotel Minneapolis and Grand Hyatt Taipei, following their refurbishment works. The closure of the poorly performing Millennium Hotel St Louis in January 2014 had also helped to improve RevPAR.

Throughout 2014, M&C remained on alert for acquisition opportunities. In general, prices demanded by owners of hotel assets remained higher than justified by hotel operating performance. Despite this overall trend, M&C succeeded in completing the acquisition of three value-adding properties: an all-suite London hotel now renamed as The Chelsea Harbour Hotel, comprising 154 suites and 4 penthouses for £65 million in March, the 480-room 4-star Novotel New York Times Square for US$274 million (£161 million) in June; and M&C’s first hotel in Italy, a 87-room 5-star hotel now renamed Grand Hotel Palace Rome for €66 million (£51 million) in October.

Altogether, the three acquisitions added £32.0 million to revenue and £6.0 million to operating profit in FY 2014. Proportionately greater contributions are anticipated in 2015, which will be their first full year of ownership by M&C.

In addition, CDL Hospitality Trusts (CDLHT), M&C’s hospitality real estate investment trust associate, acquired two hotels in Tokyo in December 2014, which will be managed under the MyStays brand.

M&C’s first hotel in Japan officially opened on 17 December 2014. The new 329-room luxury hotel is located in Tokyo’s fashionable Ginza district. Mitsui Fudosan Co., Ltd. operates the hotel as the Millennium Mitsui Garden Hotel Tokyo under a fixed-term lease and licensing arrangement. M&C co-owns the freehold and leasehold interests in the property through a joint venture with the Group.

In December 2014, Urban Environmental Improvement (UEI) approval was granted for M&C’s land in Seoul, South Korea to be used for lodging facilities. Also granted was UEI approval of the floor area ratio, footprint ratio and building height for a proposed hotel and serviced apartment construction project under consideration by M&C.

M&C is considering its options with regard to its freehold interest in Millennium Hotel St Louis, which closed in January 2014. The property occupies a 17,033 sqm site in the city. Additionally, it is also considering its options with respect to its freehold interest in a 35,717 sqm mixed use land site in Sunnyvale, California.

Apart from acquisitions and new developments, M&C regards prudent investment in the existing hotel portfolio as a means to improve return on capital. Such investment decisions are made with the utmost care, avoiding excessive disruption to current trading. Investment is also dependent on local planning constraints and permissions, which can delay individual projects.

In addition to standard maintenance expenditure across the estate, M&C invested £42.0 million in existing properties in 2014. Most of this investment was accounted for by the continuing refurbishment of the 853-room Grand Hyatt Taipei – M&C’s largest hotel in Asia. The remaining work on the common areas of the property will conclude in 2015.

M&C also completed the refurbishment of its 125-room hotel in Arizona and all 100 rooms in the main tower of Millennium Harvest House in Boulder. On 1 October 2014, the former Millennium Resort and Villas Scottsdale was re-opened as The McCormick Scottsdale after a three-month closure over the normally quiet summer months.

Elsewhere, refurbishment projects are in process at Millennium Bailey’s Hotel London, Millennium Hotel Buffalo, Millennium Hotel Anchorage and Millennium Biltmore Hotel Los Angeles. A number of significant refurbishment projects affecting other M&C properties are being planned.

M&C’s associate, First Sponsor Group Limited (FSGL), was listed on the Singapore Exchange on 22 July 2014. FSGL will continue to be an important part of M&C’s strategy for growing its presence in China, through managing hotels that are developed and owned by FSGL in the course of its work as an international mixed use real estate developer. As at 31 December 2014, M&C managed one property owned by FSGL – the 196-room M Hotel Chengdu. The 610-room Millennium Waterfront Chengdu Hotel is scheduled to open in Chengdu’s Wenjiang district in 2017. Further properties are at the planning stage.


With the challenging regulatory environment, residential property prices in Singapore are expected to continue to moderate across all market segments. The various Government cooling measures, in particular the total debt service ratio (TDSR) framework and additional buyer stamp duty (ABSD), have adversely impacted both sales volumes and prices of residential units. Average residential rents across all market segments are on the decline, coupled with a weak secondary market.

By contrast, land prices for public Government Land Sales (GLS) tenders have remained relatively resilient. While the number of bidders and the tender bids have generally moderated for sites that are not considered prime, the demand for prime sites has stayed relatively strong. Tender bids for sites with good locational attributes continued to be very competitive, typically drawing more than 10 bidders each time. The demand for GLS sites underpins the pressure on developers to replenish their depleting land banks.

Upward pressure on GLS tender prices also seems in part attributable to the restrictions imposed by Qualifying Certificates (QC) which apply to the private land market, leading many listed local developers to rely on the GLS programme for land bank replenishment, often in competition with foreign developers’ participation.

Given the Government property cooling measures, tighter credit environment, incoming supply of completed residential units and the possibility of continued rising interest rates, demand in the residential market is likely to remain subdued and residential prices are likely to continue to moderate further.

While the operating environment is expected to remain challenging, the Group will continue to maintain discipline in its investment approach to land or property acquisitions in Singapore and abroad.

The Group intends to launch two new projects in the coming months. The first is a 638-unit EC at Canberra Drive, next to the future Canberra MRT station. Comprising 2-bedroom to 5-bedroom types, with eight 10 to 12-storey blocks, this contemporary development is inspired by “Manhattan”-style living, with generous internal spaces and a thematically arranged recreational landscape. For this project, the Group will also introduce the use of Prefabricated Prefinished Volumetric Construction (PPVC), a game-changing technology for large-scale residential development which will make a quantum leap in construction productivity, worksite safety and quality control. This will likely be the largest application of PPVC in the world, and the first of its kind in Asia.

The second project is Gramercy Park, a 174-unit freehold development located along Grange Road in prime district 10, minutes away from Orchard Road and the CBD. Comprising two iconic sculptural towers, it is designed by world renowned architecture firm, NBBJ of New York. It is beautifully landscaped with a large sculptural garden, nature-inspired walking trail and a sculptural function room overlooking the 50-metre lap pool with jacuzzi. With a choice of 2-bedroom to 4-bedroom apartments and penthouses, all units are greeted by a private lift lobby with spacious, well-appointed interiors and premium finishes.

According to the Monetary Authority of Singapore (MAS), the global economic outlook is mixed and growth will be uneven across regions. The US is expected to see stronger growth relative to the other developed economies with improving private consumption in 2015. An expected US-led recovery will benefit the export-oriented ASEAN economies. However, such recovery will be partly offset by economic weaknesses in the Eurozone, Japan and China. The MAS is forecasting growth in the Singapore economy to remain moderate at between 2.0% and 4.0% for 2015.

The World Bank has ranked Singapore as the world’s easiest place to do business in 2014. Similarly, the World Economic Forum ranked Singapore the second most competitive city in the world in 2014. Singapore has continued to remain attractive for investments and talent, thus maintaining its global financial and commercial hub status. In the long run, as global economic gravity continues to shift to Asia and as trade within North Asia and Southeast Asia grows, Singapore is well positioned to become a leading global city. With such positive potential, the prospects for the office market and especially for Grade A office will remain highly favourable.

Property consultants expect the supply of office space to remain tight until the second half of 2016. Vacancy is expected to remain low for the short-term and office rents should continue to rise, albeit at a moderated pace.

In the year ahead, M&C will focus on ownership and management of hospitality real estate assets and will also commit significant capital to the refurbishment of key gateway city and other properties. Its strong financial position affords it the ability to continue seeking out attractive acquisition opportunities.

Subject to ongoing concern about the sustainability of economic recovery and other factors affecting world travel and hospitality markets, M&C is well positioned to generate further improvements in operating performance in 2015. M&C’s global RevPAR for January 2015 increased by 6.9% on a reported currency basis.

Mr Aloysius Lee joins M&C as its Chief Executive Officer (CEO) designate on 1 February 2015 and will take full control on 1 March 2015, succeeding Mr Wong Hong Ren who will step down as M&C’s CEO and from the M&C Board.

Group Prospects
In 2014, the Group made very deliberate efforts to focus on its diversification strategy via both geographic expansion and development of new investment platforms.

In keeping with these objectives, the Group has acquired approximately $1.3 billion worth of assets in US, UK, Italy, Japan and China in 2014; and additionally, also created new products in fund management such as the PPS platform. The Group has demonstrated its ability to be nimble and innovative, building value for its shareholders. Reinforcing these developments has been the injection of fresh perspectives via new senior management appointments.

Headwinds are expected to persist for the domestic market. The health of the global economic landscape remains fragile. Despite these uncertainties, there will always be pockets of opportunity and the Group remains poised to capitalise on this down cycle, to build on its capabilities, expand geographically, diversify its suite of products and create its own opportunities both locally and abroad.


On behalf of the Board of Directors, I would like to express my heartfelt appreciation to our stakeholders, including our shareholders, customers and business associates and partners, for their continued support of the Group. Mr Foo See Juan, who has served as an Independent non-Executive Director since June 1986, will be retiring from the Board at the forthcoming Annual General Meeting. On behalf of the Board and Management, I would like to thank Mr Foo for his invaluable contributions and wise counsel over the years. I would also like to thank my Deputy Chairman and fellow Directors for their invaluable advice and guidance and the Management and staff for their dedication and commitment in the past year.

Executive Chairman
16 February 2015