City Developments Limited
CDL’s business model has evolved to continuously grow and innovate, amidst the increasingly challenging Singapore residential property market.

Our plans for strategic long-term growth focus on overseas expansion and developing unique investment platforms and fund management products.

CDL remains vigilant in seeking suitable yield accretive opportunities in five overseas markets identified – the US, UK, Japan, China and Australia. In Singapore, we are cautiously optimistic of opportunities to tap the vast capital market, even as the residential property market is expected to remain subdued in the near term. The Group will also continue to maintain discipline in land or property acquisitions in Singapore and abroad.


Based on full-year figures issued by the Ministry of Trade and Industry (MTI), the Singapore economy had expanded by 2.1% in Q4 2014 on a year-on-year basis, in comparison with 2.8% in Q3 2014. On a quarter-on-quarter seasonally-adjusted annualised basis, the economic growth accelerated with an increase of 4.9% in Q4 2014, compared with the 2.6% growth in Q3 2014.

For the full year of 2014, the Singapore economy grew by 2.9%, compared with the 4.4% increase in 2013. This was in line with MTI's growth forecast of around 3.0% for 2014.

The manufacturing sector grew by 2.6% in 2014, compared with the 1.7% growth in 2013. Growth in the construction sector had moderated with an expansion of 3.0% in 2014, compared with the 6.3% growth in 2013. Similarly, the service sector grew by 3.2% in 2014, moderating from the 6.1% growth in 2013.

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 servicing ratio framework and additional buyer's stamp duty, have adversely impacted both sales volumes and prices. Average residential rents, particularly for the high-end segment, have declined, coupled with a weak secondary market.

Land prices for public Government Land Sales (GLS) tenders have remained relatively resilient. The demand for prime sites with good location has remained strong and tender bids continued to be very competitive. The demand for GLS sites underpins the pressure on developers to replenish their land banks. Furthermore, the punitive restrictions imposed by the Qualifying Certificates have caused the private land market to be deemed unfavourable for land bank replenishment. This has exerted upward pressure on GLS tender prices.

For 2014, prices of private residential properties fell by 4.0% compared with the 1.1% increase in 2013. Urban Redevelopment Authority (URA) data indicated that the Residential Property Price Index decreased from 214.3 points in Q4 2013 to 205.7 points in Q4 2014. Rentals of private residential properties declined 3.0% year-on-year in 2014, a reversal from the 0.9% increase in 2013.

The 845-unit Commonwealth Towers is conveniently located on the city fringe, next to Queenstown MRT station.

A total of 7,316 private residential units were sold by developers in 2014 compared with 14,948 units in 2013, a drop of 51.1%.

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, CDL performed credibly for project launches in 2014 – Coco Palms and Commonwealth Towers. Both projects launched in May were respectively the first and second best-selling project for that month in terms of sales volume. Coco Palms went on to become one of the top-selling projects in 2014.

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 other developed economies with improved private consumption in 2015, benefitting the export-oriented ASEAN economies. The US-led recovery, however, will be partly offset by economic weaknesses in the Eurozone, Japan and China. The MAS is forecasting Singapore’s economic growth to remain moderate at between 2.0% and 4.0% for 2015.

Given the various headwinds, a large 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 prices will continue to moderate, possibly at a sharper pace.

URA statistics showed that the overall price index for office space increased by 4.5% in 2014, compared to 5.2% in 2013. The overall rental index for office space shot up by 9.8% in 2014, accelerating from the 1.3% climb in 2013. The island-wide occupancy rate at the end of 2014 dipped to 89.8%, from 90.1% in 2013. Total available office space as at end of 2014 was approximately 81.3 million square feet (sq ft). About 11.4 million sq ft of new office space is expected between 2015 and 2019. Real estate advisory firm CB Richard Ellis (CBRE) forecasts that supply of office space will remain tight until the second half of 2016. Therefore, office rents should continue to rise, albeit at a slower pace.

In 2014, Singapore was ranked the world’s easiest place to do business by the World Bank and the second most competitive city in the world by the World Economic Forum. In the long run, the global economic gravity will continue to shift to Asia, and Singapore is in pole position to become a top global city. As a result, the prospects for the office market, especially the Grade A segment, will remain favourable.

According to URA statistics, the island-wide occupancy rate of shop space for 2014 declined marginally to 94.2%, from 95.5% in 2013. Rentals rose by 0.9%, against a decrease of 0.8% in 2013. Prices increased by 0.9% in 2014, compared with an increase of 4.6% in 2013.

Overall, the retail climate was challenging in 2014. Escalating operating costs exerted much pressure on retailers. According to CBRE, tenants were more resistant towards rental increases, given the growth in retail supply which provided more options. According to Colliers, the dynamics for the retail real estate market in 2014 will likely remain in 2015. Colliers estimates that 1.2 million sq ft of retail space will be completed in 2015. Overall, demand should keep up with supply, with new spaces being filled up by mainstay retailers and anchor tenants. Colliers expects rental growth for prime retail space in Orchard Road to range between -1% and 1%, and 0% to 2% for the suburban retail areas in 2015.

The Singapore tourism industry recorded a drop in tourist arrivals in 2014. Singapore Tourism Board (STB) statistics showed that 15.1 million visitors visited Singapore in 2014, a decrease of 3.1% year-on-year.

STB’s statistics also showed that the overall hotel average room rate (ARR) in 2014 was about $257.70, a slight decrease of 0.2% compared to 2013. The Luxury and the Economy segments posted year-on-year increases of the ARR at 5.9% (ARR of $461.80) and 8.7% (ARR of $109.10) respectively in 2014. For the same period, the Upscale and Mid-tier segments posted year-on-year decreases of 0.9% (ARR of $266.20) and 2.8% (ARR of $185.20) respectively. The overall average occupancy rate in 2014 was 85.5%, a drop of 0.9% from 2013.

Singapore was awarded the Top International Meeting Country for the third year in 2014, testament to its position as a top tourists’ destination. Strong fundamentals such as political stability, a safe environment for tourists and a vibrant economy continue to support Singapore’s tourism.


The Novotel New York Times Square is within walking distance of New York’s famed attractions such as Times Square, Central Park and Fifth Avenue.

US economic recovery continued in 2014 with a GDP growth rate of 3.9%, allowing the Federal Reserve to wind down its Quantitative Easing programme. As the economic recovery continues, the Federal Reserve is expected to raise interest rates in 2015 for the first time since 2006. However, reduced commodity prices have kept the outlook for inflation benign, resulting in lower medium term interest rate expectations. 2014 was a strong year overall for the US real estate sector, with capital value growth across residential, offices, retail, industrial and hotel sectors. As job growth remains healthy along with rising consumer and business confidence, we remain positive on the outlook for the housing market in 2015.

Millennium & Copthorne Hotels plc (M&C) acquired the Novotel New York Times Square in 2014, and its US network now spans 19 hotels.

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 likely outperform the UK on average. 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, followed by the London mayoral election in 2016, may have some bearing on real estate. However, we expect the underlying strength of the economy to offer some protection from political risk and while we continue to be diligent in the assessment of new investments, we have reason to be cautiously optimistic about the outlook for London.

As at 2014, CDL has invested about £157.0 million in six prime freehold properties in London for real estate development. The Group is planning to market its Reading, Belgravia, Chelsea and Knightsbridge projects in Q2 2015. M&C also purchased the all-suite, 5-star hotel – The Chelsea Harbour Hotel – situated in London’s upscale Chelsea Harbour area.

In 2014, the Bank of Japan reaffirmed its commitment to Abenomics by expanding its Quantitative Easing programme to ¥80 trillion per year. This has fueled further compression in real estate capitalisation rates as investment activity remains buoyant, with over US$30 billion of direct commercial real estate transactions.

Meanwhile, Tokyo condominiums have increased by 18% in value since 2013. We expect monetary policy and foreign investment policy to remain accommodative as structural reforms are implemented and we forecast demand to remain robust as the country gears up for the 2020 Olympic Summer Games.

In 2014, CDL acquired a high-end residential site in Tokyo. M&C opened its first flagship hotel in Japan, the Millennium Mitsui Garden Hotel Tokyo, in the Ginza district. CDL Hospitality Trusts acquired two hotels – Hotel MyStays Asakusabashi in central Tokyo and Hotel MyStays Kamata near Tokyo’s Haneda Airport. The Group will continue to seek opportunities in the country.

The difficult transition towards a lower, more sustainable growth rate under the leadership of Xi Jinping continues to present both opportunities, and risks, in the real estate sector.

Eling Residences in the Yuzhong district of Chongqing is the first residential project in China to receive the Building and Construction Authority’s Green Mark Platinum Award.

A strong anti-corruption drive, tight credit conditions and large amounts of housing inventory have created an atmosphere of caution amongst buyers, with prices falling across 70 cities between 1% and 4.3% year-on-year in the last four months of 2014. However, we continue to believe in the longer term potential for China, and in the immediate term, we expect the relaxation of mortgage policies, home purchase restrictions and easing of credit conditions to improve demand. As such, we remain fully committed towards developing our China operations.

In 2014, CDL China Limited gained a foothold in Shanghai by acquiring Shanghai Jingwen Zhaoxiang Real Estate Limited for RMB 799 million, adding to its portfolio of Eling Residences and the Huang Huayuan site in Chongqing’s Yuzhong district, as well as Suzhou Hong Leong City Center. M&C also opened its first resort in China, the Millennium Resort Hangzhou, bringing the total number of properties it has in the country to 11.

While Australia continues to experience a period of ongoing economic expansion, with GDP increasing by 2.75% in 2014, this was below the long term average of 3.25% given price declines in the commodity sector.

However, as investors search for yield globally, Australia, with its relatively higher yielding assets and depreciating currency, should continue to attract a disproportionate share of global real estate investments.

With a further 0.25% interest rate cut in January 2015, we expect investment activity to remain elevated as monetary conditions remain accommodative, together with expected improvements in job growth and non-mining capital expenditure in the second half of 2015. CDL remains on the lookout for opportunities amidst a highly competitive investment market.