Market Watchers Upbeat On CDL’s Singapore Office Assets

SINGAPORE – CGS-CIMB Research and RHB Group Research are both optimistic on the outlook of City Developments Ltd (CDL), including on its office investment properties, reported The Edge on Monday evening (22 November, SGT).

For instance, CGS-CIMB Research analyst Lock Mun Yee has a “relatively optimistic outlook” as Singapore gradually reopens its borders.

Lock cited CDL’s Q3 FY2021 business update that was published on Friday. In that local bourse filing, she underscored the real estate developer’s robust residential sales for the first 9 months of the fiscal year and high occupancy rates for the company’s investment properties.

As of the end of the quarter under review, CDL’s office properties in Singapore were 91.5 percent occupied, surpassing the city-state’s national average of 87.1 percent. In particular, the company’s flagship Grade A office building, Republic Plaza, continues to see positive rental reversion in Q3 2021, with a committed occupancy of 94.7 percent.

“Demand for CDL’s office space continues to be supported by wealth management, family office and technology/fintech companies,” highlighted Lock.

In the mid-term, the company office rent is forecasted to increased further, supported by the low supply of office space in Singapore over the next 3 years. In addition, the majority of CDL’s office leases that are expiring by 2021 have been negotiated.

Meanwhile, RHB Group Research analyst Vijay Natarajan revealed that CDL’s sale of Millenium Hilton Seoul is expected to boost the company’s balance sheet. Notably, IGIS Asset Management Co is close to acquiring the property for about S$1.15 billion, with Natarajan anticipaing CDL to book gains of more than S$500 million on the divestment.

“We expect part of the proceeds to be used to fund redevelopments of Fuji Xerox towers and Central mall in Singapore,” he added.