City Developments—controlled by billionaire Kwek Leng Beng—said Thursday that continuing losses at its hotels amid pandemic-induced travel restrictions is offsetting robust homes sales across Singapore, Australia and China.
The Singapore-listed developer posted a S$32.1 million ($23. 7 million) net loss in the first-half ended June 30, compared with a profit of S$3.1 million the year before. The group’s revenue increased by 11% to S$1.2 billion, boosted by an increase in housing sales. However, income from its hotel and commercial properties declined as governments enforced lockdowns to contain the spread of coronavirus.
City Developments’ results have also been impacted by higher tax expenses and financing costs. Ongoing financial troubles at its cash-strapped Chinese subsidiary Sincere Property, which is facing bankruptcy claims in China from one of its creditors, is also dragging overall performance, the company said last week.
City Developments wrote off S$1.78 billion from its investments in Sincere Property last year, driving the group to report a net loss of S$1.9 billion for 2020, its worst-ever financial performance. The company said its financial exposure to Sincere Property stands at S$117 million as of June 30 and all its interest receivables from the Chinese unit have been impaired.
“We are optimistic of a stronger rebound by the end of 2021/early 2022 and expect strong latent demand for travel domestically and regionally, with further upside once international travel is allowed,” company chairman Kwek said in a statement. Going forward, we look confidently towards a steady economic recovery and better growth trajectory in the near-term horizon given a universal resolve to open economies.”
One bright spot for the group is its residential business. In Singapore, the group sold 971 housing homes valued at S$1.7 billion in the first half, up from the 356 units worth S$514.7 million that were sold a year ago. Projects across China and Australia are also selling well, it said.
To tap the surging demand for housing in Singapore, City Developments said it plans to launch four residential projects comprising almost 2,000 housing units in the coming months.
In partnership with CapitaLand, City Developments will launch CanningHill Piers, a 696-unit development in Clark Quay just across the Raffles Place financial district, in the fourth quarter. The project along the Singapore River is part of the redevelopment of the former site of the Liang Court shopping complex into a mixed-use residential, commercial and hotel complex.
In 2022, City Developments said it will launch the residential component of the Fuji Xerox Towers redevelopment project in Tanjong Pagar, on the edge of the central business district. It will also launch two other residential projects in western and central Singapore next year.
Kwek, 80, is also the chairman of Singapore’s Hong Leong Group, which was founded by his father in 1941. His cousin Quek Leng Chan, also a billionaire, runs a separate group in Malaysia, also called Hong Leong. With a net worth of $8.5 billion, Kwek was ranked No. 8 on the list of Singapore’s 50 Richest that was published today. His eldest son Sherman has been group CEO of City Developments since 2018.