Big name real estate companies in Singapore, City Developments Ltd., and CapitaLand Investment Ltd., revealed larger-than-anticipated drops in full-year earnings following years of hardship due to rising interest rates and the global real estate market slump.After being severely damaged by high-interest rates and a worldwide real estate slowdown, Singapores largest real estate companies, City Developments Ltd. and CapitaLand Investment Ltd., revealed larger-than-expected drops in full-year profits. Shares crashThe largest listed developer in the city-state, CDL, reported its net income for the year ended December at S$317 million ($236 million), a 75% decrease from a record set in 2022. That was less than the average analyst estimate of S$358 million. According to CapitaLand Investment, a real estate investment manager, net income dropped 79% to S$181 million. That was less than the S$815 million average projection.On Wednesday morning in Singapore, CDLs shares dropped as much as 2.2%, but CapitaLand Investment increased by 0.7%. Over the past year, both stocks have suffered severe losses—more than 20% of their value. CDL Chairman Kwek Lengs remarksExecutive Chairman Kwek Leng Beng expressed that CDLs results were resilient in the face of a very challenging year for the global real estate sector, with a high-interest rate environment, inflation, weak global economies, and geopolitical tensions.Kwek also emphasized the difficulty presented by attempts to slow down the regional real estate market. The increase in stamp duties last year caused Singapores developers to sell the fewest private residential units they had sold since 2008.CDLs revenue rises A rebound in hotel and residential revenue has lessened the impact. Last year, CDLs revenue reached a record S$4.94 billion, a 50% increase. That exceeded the S$4.08 billion average estimate of analysts. CapitaLand assetsThe substantial property assets in China of CapitaLand Investment, supported by state investor Temasek Assets Pte, continue to be a significant hindrance. Its geographical allocation is mostly concentrated in the country, accounting for about 34% of its S$134 billion in assets under management. It sold S$2.1 billion worth of assets last year.CapitaLand future plansIn 2023, revenue decreased 3.2% to S$2.78 billion, as predicted by analysts. The company established a new aim of doubling the amount of money under administration to S$200 billion in the next five years and stated that it is on track to fulfill its 2024 target of S$100 billion.The company will expand yuan-denominated funds, optimize its China portfolio and expand its fund product offerings in markets like South Korea, Australia, and Japan, according to CEO Lee Chee Koon.That might take some time, and a rebound in transactions is probably only going to occur if interest rates decline in the second half of 2024. Before the earnings, analysts Ken Foong and Patrick Wong of Bloomberg Intelligence stated in a note.
