By Michele Batchelor
Feb. 14 (Bloomberg) -- CapitaLand Ltd., Southeast Asia's
largest property developer, said fourth-quarter profit rose
almost five times, better than analysts expected, as it sold
Singapore homes at higher prices and had divestment gains.
Net income increased to S$455.8 million ($296 million), or
16.2 cents a share, from S$93.2 million, or 3.3 cents a share, a
year earlier, the company said today in a statement to the
Singapore stock exchange. That's higher than the S$129 million
median estimate of five analysts surveyed by Bloomberg News.
Sales rose 11 percent to S$999 million.
CapitaLand and City Developments Ltd., Singapore's biggest
developers, are tearing down old apartment blocks to build new
ones as the longest economic expansion in more than five years
fuels housing demand. Home prices in the city-state rose 3.8
percent in the fourth quarter, the biggest gain in seven years.
``Looking ahead, the Singapore property market is
experiencing an exceptionally strong upturn in the private
residential, office, retail, entertainment and serviced residence
segments,'' the company said in the statement. ``Positive macro
drivers continue to be seen in the region.''
The company made gains of S$163.8 million from the sale of
malls in China, its stake in Hotel Inter-Continental in Singapore
and properties in Hong Kong and Australia, it said in the
statement. It also revalued some of its properties in Singapore
and wrote back S$72 million as office rents improved.
`Catch Up'
``There's some catch-up to do, property has been a laggard
for many years,'' said David Cohen, an economist at Action
Economics. ``The economic picture remains bright and that should
be good for property, there is still a bit of a run on the
upside.''
Cohen expects the Singapore economy to expand by at least 5
percent this year after a 7.9 percent gain in 2006.
CapitaLand shares rose 25 cents, or 3.5 percent, to S$7.50
at 9 a.m. Singapore time, set for a record close.
For the full year, Singapore's biggest property developer
posted record net income of S$1.02 billion, or 36.2 cents a share
compared with S$750.5 million, or 28.1 cents a share, a year
earlier, it said. In 2005, it had a one-time gain of S$424.8
million from the sale of the 119-year-old Raffles Hotel in
Singapore and other assets.
This year, CapitaLand plans to put as many as 1,200
apartments up for sale in Singapore, 26 percent more than the 954
it sold for S$1.23 billion in 2006, it said last month.
Strong Economy
CapitaLand is also buying a residential property for S$548
million to double its land reserves, it said Feb. 6. The company
will redevelop the 607-unit property in Singapore and expand the
number of apartments to 1,200, CapitaLand said. The developer
also plans to start selling homes at a 56-story residential and
retail project along the city's main retail strip in March.
As a result of the strong sales and better margins earned in
Singapore, contributions from its home base rose to 51 percent of
pretax profit for 2006 from 21 percent in 2005.
Singapore's economy expanded 7.9 percent in the fourth
quarter from a year earlier, accelerating from a revised 3.9
percent in the previous three months, the government said today.
Construction contracts in Singapore rose 40 percent to
S$16.1 billion in 2006, the government said, ending almost five
straight years of shrinkage. Construction contracts are expected
to reach as much as S$19 billion this year, the government said.
Prices of private homes rose 10.2 percent last year, with
properties in the city's prime districts gaining 17 percent,
according to government data. Office rents rose 11.6 percent in
the fourth quarter and 30.3 percent in all of 2006, according to
the government data.
Credit Suisse Group predicts residential prices will rise 15
percent this year for the ``mid-high end'' market and by as much
as 10 percent for so-called mass-market properties. Merrill Lynch
& Co. estimates that prices of residential property will rise 7
percent to 10 percent this year.
