City Developments (CDL) began life in a small, rented office in Amber Mansions on Sept 7, 1963, staffed by eight employees, to acquire, develop and sell property. The company went public in November 1963, and its shares were listed on what was known then as the Malayan Stock Exchange.

 

In 1965, CDL completed its first housing project, Fresh Breezes in Johor Bahru, and pioneered the &ldquo showflat&rdquo concept. This was followed by the launch of its first high-rise residential development in Singapore, City Towers, as well as the completion of Phase One of Clementi Park, CDL&rsquo s first &ldquo full&rdquo condo concept project, in 1966.

 

In 1972, the Hong Leong Group acquired a controlling interest in CDL. The group&rsquo s first mixed-use project, City Plaza, was completed in 1980. The group&rsquo s flagship skyscraper, Republic Plaza, was completed in 1996 and opened in 1998. At 280m, it is the joint-tallest building in Singapore along with UOB Plaza 1 and One Raffles Place. The record would be held for more than 20 years, till the 290m Guoco Tower was completed in 2016.

 

For many years, CDL was known as the most conservative developer in Singapore. This was partly because it kept to historical cost accounting when other developers and companies moved to mark-to-market valuations. As a result, its price to net asset value ratio used to be above one time while other developers traded at a discount.

 

In 2013, CDL started the first of many purchases in the UK with a carpark property in Knightsbridge for the equivalent of $159.6 million. In 2014, CDL acquired Stag Breweries Mortlake for $334.96 million, and a site in Teddington, Richmond-upon-Thames, for $180.2 million, followed by Ransomes Wharf in 2017 for $103.2 million. Ransomes Wharf was divested for $115.3 million.

 

In 2023, CDL acquired the Morden Wharf development in Greenwich as part of a joint venture with Galliard Homes for the equivalent of $129.6 million. The Morden Wharf project is a large-scale development with a proposed 1,500 residential units, commercial, and retail space.

 

In March 2023, CDL completed the acquisition of St Katharine Dock for the equivalent of $636 million. Last year, CDL acquired the Hilton Paris Opera Hotel for the equivalent of $350.2 million.

 

These acquisitions in the past 12-13 years caused CDL&rsquo s gearing to balloon to around 117% based on historical cost and 72% based on mark-to-market valuations. In the past 10 years, CDL toyed with private equity when then CEO Grant Kelley created profit participation securities to securitise commercial properties and unsold residential properties in private equity funds, which have since been unwound.

 

In FY2024&rsquo s presentation, Morden Wharf in Greenwich and Mortlake in Richmond are classified under &ldquo planning in progress&rdquo . The Teddington site, which has been renamed Teddington Riverside by CDL, is classified as build-to-sell. A small property in central London, 31 & 33 Chesham Street, Belgravia, is also a build-to-sell property.

 

On May 20, CDL announced it has received planning permission for a GPB1.1 billion ($1.88 billion) residential-led mixed-use scheme on the former Stag Brewery site in Mortlake for 1,068 homes, a 1,200-pupil secondary school academy, retail, offices, hotel, cinema and nine acres of green space. &ldquo The group will review its plans for the site now that planning consent has been granted,&rdquo CDL said.

 

For all these corporate moves, this year, CDL will likely be remembered for the board tussle that pitted father against son. On Feb 26, CDL announced that executive chairman Kwek Leng Beng filed court papers to replace group CEO Sherman Kwek with nephew Kwek Eik Sheng, claiming corporate governance lapses. The family issues have been settled.

 

On July 15, following the resignation of Philip Yeo from CDL&rsquo s board, JP Morgan upgraded CDL to overweight from neutral with a target of $6.85. &ldquo We believe the desire to repair reputations and CDL&rsquo s share price should galvanise CDL to be more proactive to execute a monetisation and deleveraging plan going forward, despite bumps along the way,&rdquo JP Morgan says. Since the report, CDL&rsquo s share price is up 12.4% and last traded at $6.26 on Aug 4.

 

The appointment of board directors, the retirement of Yeo, the sale of South Beach, the declines in Sora and borrowing costs, the sale of non-core assets, and extra profit recognition from projects delayed last year should aid in the share price re-rating, JP Morgan indicates.

 

&ldquo We believe CDL&rsquo s board and management are motivated to repair their reputations following the earlier dispute, with a recovering share price being the best approach. The unexpected sale of South Beach &mdash despite prior reluctance to cede control &mdash gives us confidence in CDL&rsquo s commitment to enhancing shareholder value. Further non-core sales are anticipated to sustain improved sentiment and act as positive share price catalysts, with the potential disposal being the former Stag Brewery site in Mortlake, London, recently receiving planning approval,&rdquo JP Morgan says.

 

The divestment of Mortlake will help reduce gearing, demonstrate CDL&rsquo s book value, and boost profitability, as the landbank generates zero income and allows CDL to repay more expensive GBP debt. Other non-core assets include commercial strata title units and less well-positioned lodging assets, according to JP Morgan.

 

CDL&rsquo s shareholders are likely to keep a close watch on the group&rsquo s divestment plans as it repairs its balance sheet and its share price moves closer to the end-December 2024 NAV of $10.17.

The developer also tops bids for another EC site at Senja Close with S$771 psf ppr offer

 

[SINGAPORE] In a determined bid to replenish its executive condominium (EC) project pipeline, City Developments Ltd (CDL) topped offers for two EC sites at tenders closing on Tuesday (Aug 5). 

 

Both plots drew firm interest from five bidders, with CDL&rsquo s bids also setting new benchmarks for EC land. 

 

A Woodlands Drive 17 parcel for 420 units saw a top bid of S$360.9 million or S$782 per square foot (psf) per plot ratio (ppr), slightly over the previous high set by Sim Lian&rsquo s S$768 psf ppr bid for a Tampines EC tendered in October 2024.

 

The other EC parcel tendered, a plot in Senja Close in Bukit Panjang that can yield 295 units, was also topped by CDL at S$252.9 million or S$771 psf ppr.

 

Three out of five bids for the Woodlands plot came in above the previous high.

 

CDL&rsquo s bid for the Woodlands site was a mere S$1 psf ppr (0.2 per cent) higher than the second-highest of S$360.3 million (S$781 psf ppr) placed by a partnership between Sim Lian Land and Sim Lian Development. The next highest offer of S$355.2 million, or S$770 psf ppr, came from Intrepid Investments and TID Residential.

 

This was followed by a tie-up between Hoi Hup Realty and Sunway Developments, with a bid of S$352 million, or S$763 psf ppr. Coming in last was EL Development, which placed a bid of S$328.1 million or S$711 psf ppr.

 

Bids were at the higher end of analysts&rsquo expectations of S$700 to S$770 psf ppr. 

 

Consultants predicted firm demand for the 25,207 square metre (sq m) site, and had anticipated four to eight bids, given the pent-up demand for new ECs in the area.

 

Located next to Singapore Sports School, the land parcel has a maximum gross floor area (GFA) of 42,853 sq m and is expected to yield some 420 new units. 

 

The last EC parcel awarded in the Woodlands area was in 2015 &ndash to Hao Yuan Investment for S$103.8 million or S$278 psf ppr. The project, Northwave EC, was launched for sale in 2016 and has a median new sale price of S$779 psf.

 

Senja Close bids

For the Senja Close site, CDL also beat four other bidders with its offer of S$252.9 million or S$771 psf ppr. This was followed by TID Residential, with a bid of S$238 million or S$725 psf ppr.

 

Oriental Pacific Development came third with a bid of S$234.9 million or S$716 psf ppr. Next was Wee Hur Development at S$231.4 million or S$705 psf ppr. The lowest bid was by a tie-up between ABR, RP Ventures and LWH, with a bid of S$230.9 million or S$704 psf ppr. 

 

Consultants had expected the Senja Close site to draw two to six bids, with land rates ranging from S$600 to S$750 psf ppr.

 

Located along the Kranji Expressway, the site has a maximum GFA of 30,478 sq m, of which at least 500 sq m will be for an early childhood development centre that can in up to 100 children.

 

The last EC parcel awarded in the Bukit Panjang area was in 2010 to Grand Isle, a CDL unit, for S$182 million or S$271 psf ppr. The project, Blossom Residences, was launched for sale later in 2011, and has a median new sale price of S$704 psf, according to caveats lodged.

 

Prices of EC projects have trended upwards over the last few years, held up by limited supply and strong demand. 

 

The most recent EC launch, in the West, is Otto Place by developers Hoi Hup Realty and Sunway Developments, which clinched the site for S$423.4 million or S$701 psf ppr in February 2024. The project sold 351, or 58.5 per cent, of its 600 units during its launch in July. The average price of its units sold under the normal payment scheme was S$1,700 psf.