Speaker 1: It's a Singapore today top story with Lance and Daniels.
Speaker 2: Well, City Developments Limited, CDL shares dropped to 16-year lows today,
Speaker 2: the first day of trading resumption for the property giant.
Speaker 2: And this follows a three-day halt due to an ongoing
Speaker 2: power tussle between executive chairperson Kui Ling Being and his son,
Speaker 2: Group CEO Sherman Kwek. The counter was last seen trading
Speaker 2: at about $5 at 5:42 p.m. It's pulled back some
Speaker 2: losses after sinking over 6%.
Speaker 2: To $4.79 at the market open. How, there's a reason
Speaker 2: we know CDL so well. There's a reason this story
Speaker 2: has captured the interest of the whole nation and international
Speaker 2: press as well. Obviously, it's one of the richest and
Speaker 2: not the richest families in Singapore and everybody loves seeing
Speaker 2: how the 1% lives.
Speaker 2: Um, but also CDL is a household name, literally. Yeah, yeah,
Speaker 2: it is, yeah. It's built some of the biggest properties
Speaker 2: and developments on our island. Many of you are living
Speaker 2: in CDL properties. So on today's edition, we're looking at
Speaker 2: how CDL built up its legacy and its brand.
Speaker 2: And we'll continue to monitor where its pricing um goes
Speaker 2: in the days and weeks ahead, Nicholas Mark is here,
Speaker 2: Chief Research officer at Property Portal mogul.sg. Nicholas, welcome aboard.
Speaker 2: Thank you for having me. Do you think CDL is
Speaker 2: one of the, if not the most prominent developer in Singapore,
Speaker 2: or would it be Far East?
Speaker 2: Well, I think uh for a listed developer, it will
Speaker 2: be city development. Uh, Far East Organization is another very
Speaker 2: big real estate developer in Singapore, but they are not
Speaker 2: listed on the stock exchange. So, um, when we want
Speaker 2: to look at share prices and so on, um,
Speaker 2: It will be city development, Capital land, and others who
Speaker 2: are listed on the SGX. You know, I was looking
Speaker 2: at how many locations they have and how many countries,
Speaker 2: and here's what I found. 163 locations in 29 countries
Speaker 2: and regions. So it's all over the world, Nicholas. It
Speaker 2: is such a big brand.
Speaker 2: Uh, yes, they are. Uh, and of course, they are quite,
Speaker 2: they are very well diversified, uh, for, for a company,
Speaker 2: some develop, there are basically two main methods that developers
Speaker 2: use to generate revenue. First is real estate development, primary
Speaker 2: residential property. You buy land, build.
Speaker 2: And sell. And the second one is to own a
Speaker 2: portfolio of investment properties to rent it out and to
Speaker 2: earn rental income, such as commercial properties, hospitality and such.
Speaker 2: Now city development has a very well diversified portfolio. They
Speaker 2: do both of these main activities as well, and I think,
Speaker 2: of course, um.
Speaker 2: The Ari, which was just launched recently, city development has
Speaker 2: a stake in it, and that often residential development often
Speaker 2: captured the headlines and it's also a good branding exercise
Speaker 2: for the developer as well.
Speaker 2: Let's talk about some of the most prominent developments um
Speaker 2: that we know of. I think they've got a long,
Speaker 2: long 60 year history in Singapore. Let's talk about some
Speaker 2: of the more familiar ones.
Speaker 2: Um, over in the Marina Bay area, the sale, it was,
Speaker 2: it was Singapore's then tallest residence in the early 2000s,
Speaker 2: and if I'm not wrong, in the entire plot that
Speaker 2: was reclaimed, it was like the first building there. When
Speaker 2: it first came out, there was nothing down there. Yes, yes, correct.
Speaker 2: $700 per square foot or something like that.
Speaker 2: And, and, and not only was it, uh, the amazing
Speaker 2: thing is that this piece of land was sold through
Speaker 2: a government land sale program, and it was zoned as
Speaker 2: a white site. Now, typically, a piece of land that's
Speaker 2: so near to the Raffles Place, zoned as as a
Speaker 2: white site, the developer will typically build an office building.
Speaker 2: Perhaps you have some.
Speaker 2: Shops and restaurants on the first few stories, but it
Speaker 2: will predominantly be office building. But because um the development
Speaker 2: plans came about in 2003 when there was the SARS epidemic.
Speaker 2: So we were wondering like, oh, what is city development
Speaker 2: going to do, because the demand for office space wasn't
Speaker 2: really that strong, and it was quite brilliant. The company
Speaker 2: actually
Speaker 2: Develop it into a high rise apartment, 1,111 units in total.
Speaker 2: And so, and this, and when it was launched, it
Speaker 2: was in 2004, pandemic over, the government announced that we're
Speaker 2: going to build two IRs, one of them at Marina Bay,
Speaker 2: and there was a lot of excitement. People want to
Speaker 2: cash in, how do I profit.
Speaker 2: How do I capitalize on this new this new concept
Speaker 2: about an integrated resort? And Tower One of the Sail
Speaker 2: and Marina was launched in September 2004 at just an
Speaker 2: average of $950 per square foot, and people snap it up.
Speaker 2: People snap it up. That's bay facing, you know, because
Speaker 2: it's facing the bay, there's no obstruction, nothing.
Speaker 2: Yes, it was a very new concept, right, uh, to,
Speaker 2: to have uh residential development in the city area. And
Speaker 2: of course, subsequently in 2005, 2006, other developers follow suit, um,
Speaker 2: they redeveloped um.
Speaker 2: Some of their office buildings, old office building at Shenton Way,
Speaker 2: redeveloped it as residential development and they sold as like
Speaker 2: hot cakes because from 2004 to 2008, it was a massive.
Speaker 2: So the sale really paved the way for residential in
Speaker 2: the CBD you would say?
Speaker 2: I, I'll say it's a pioneer of the area. Let's
Speaker 2: talk about some of the other big ones for CDL. Yeah,
Speaker 2: we've got Saint Regis Residences. You've got the equatorial. You've
Speaker 2: got City Towers. You've also got Lot One Shoppers Mall
Speaker 2: in Chua Chu Kang. I remember because it was where
Speaker 2: the hotel was. It was a it was the Hotel Equatorial,
Speaker 2: wasn't it. So to think about it, they started off
Speaker 2: building City Plaza in the area.
Speaker 2: Yeah, Geylang Paya Lebar area and to see how they've come.
Speaker 2: I got one better. Which one? 1985 they built Clementi
Speaker 2: Park Condominium. That's at Sunset Way. This is almost a
Speaker 2: million square feet. It's, it's gigantic, and I think it's
Speaker 2: one of the earliest mass condo town areas. I know
Speaker 2: we didn't prepare you on this one and we didn't
Speaker 2: tell you we're going to mention it, but, but does
Speaker 2: this strike a bell, Clementi Park to you? It's freehold.
Speaker 2: Uh, yes, it does. Now, the, I think you need
Speaker 2: to have the developer need to be very big. You
Speaker 2: need to be trusted by consumers in order to pull
Speaker 2: off something like that to build condos in Singapore? Is
Speaker 2: this potentially one of the first condos in Singapore? I'm
Speaker 2: not sure actually. Um, may not, I'm not sure if
Speaker 2: it is because we already have non-landed properties and I
Speaker 2: think it was only subsequently that the that the government
Speaker 2: start to classify, make a difference between apartments and uh.
Speaker 2: Condominiums where condominiums, you know, the land needs to be
Speaker 2: above 4000 square meters, and you need to have facilities
Speaker 2: and so on. But it could, yes, I think it
Speaker 2: could be one of the much earlier ones. I'm, I'm
Speaker 2: googling it. Apparently the oldest condominium in Singapore is called
Speaker 2: Beverly Mai, was completed in 1974, built at the cost
Speaker 2: of $4 million. It was 28 stories and it was
Speaker 2: at Tomlinson Road. OK.
Speaker 2: I don't know. That is Novena.
Speaker 2: I, I know, I know where it's, uh, near Grange Road. Yeah, yeah. OK, OK. Uh, Nicholas,
Speaker 2: will this recent family drama between father and son in
Speaker 2: the boardroom, do you think it's going to slow down
Speaker 2: any of their current properties being developed?
Speaker 2: Well, I don't think so. That it might have a
Speaker 2: bit of a road bomb, but the, the road was,
Speaker 2: I mean, the vehicle will still go ahead. Um, then
Speaker 2: it's an ongoing saga, but I think the company will
Speaker 2: still continue as a going concern. We will still see
Speaker 2: it being developed. It's just that perhaps
Speaker 2: Um, certain major business decisions, uh, might be delayed, uh,
Speaker 2: but like, for example, land acquisitions, um, but I think
Speaker 2: that eventually this, this, um, issue will have to be,
Speaker 2: this family issue will have to be settled one way
Speaker 2: or another, um, in order for, well, I think for,
Speaker 2: for all the stakeholders um to be able to uh
Speaker 2: carry on.
Speaker 2: It's interesting when, when I was shopping around, I remember I, I,
Speaker 2: I interacted a lot of people who also shopping around
Speaker 2: and they talked about like, oh no, no, if you
Speaker 2: want quality, you buy the CDL one, right? You know,
Speaker 2: there was, there was this brand association, there was also
Speaker 2: this brand association with um green buildings. They have a
Speaker 2: lot of green mark building um categorization as well. Do
Speaker 2: you think the brand name in the shop, in the
Speaker 2: buyer's mind is going to be affected by this?
Speaker 2: I don't think so because I I think it still
Speaker 2: has a lot of city development, the branding still carries
Speaker 2: a lot of goodwill among Singaporeans and um although if
Speaker 2: dirty laundry starts being aired, then it changes everything.
Speaker 2: Uh, no, not really. I don't think so unless it,
Speaker 2: I don't think this will happen, but in the most
Speaker 2: unlikely event, if this were to be eventually led to
Speaker 2: lower quality products being pushed out into the market, then yes,
Speaker 2: it will have a negative impact, but I highly doubt.
Speaker 2: that that will happen. I guess one of the blemishes
Speaker 2: would be when it lost money in the UK and China.
Speaker 2: I think it lost something like $1.9 billion with a,
Speaker 2: with a B, yes. So there must have been quite
Speaker 2: a severe hit for them because this was just as
Speaker 2: COVID hit too.
Speaker 2: Ah yes, I, I, I think that was a big, big, um, bump, uh, big,
Speaker 2: big road bump there and uh it does, it does also, uh,
Speaker 2: it did also create um, yes, Friction the family as
Speaker 2: well as, uh, is also reflected in the decline in
Speaker 2: the share price and marketization. We saw that today. They've
Speaker 2: got some new launches happening.
Speaker 2: Uh, on their website, they've listed, um, Anson Road, Newport Residences,
Speaker 2: which is a mixed-use development and by the way, it's freehold,
Speaker 2: very rare to get a freehold piece right there at
Speaker 2: Anson Road, and one on Zion Road, which is going
Speaker 2: to be an integrated development, and that's a 99 year
Speaker 2: leasehold as well. The new launches, I mean, they've been
Speaker 2: in the works for a long time la. It's, it's
Speaker 2: potentially not going to be affected.
Speaker 2: No, I don't think so, because you see, the development
Speaker 2: plans would already have been finalized. Uh, it's just a
Speaker 2: matter of timing, of course, many things have to come in,
Speaker 2: getting all the government approvals, uh, making sure that you
Speaker 2: have all your marketing efforts, everything lined up in order
Speaker 2: for it. And the other thing is timing. You see,
Speaker 2: some developers will also have to wait, uh, also want
Speaker 2: to time, uh, choose the right.
Speaker 2: timing to launch their properties at a time when they
Speaker 2: believe that they are not in direct competition with another
Speaker 2: project in the same targeting the same market segment or
Speaker 2: in the same neighborhood, and also they are able to
Speaker 2: garner enough marketing agents from the big agencies to push
Speaker 2: out their projects. What is their strength because they got
Speaker 2: a couple of shopping centers.
Speaker 2: Not a lot, not like Far East, which has more
Speaker 2: I guess in the retail segment. I think they're big
Speaker 2: on mixed developments as well. Now, now definitely. I, I
Speaker 2: think previously it was mainly about middle to high-end condominiums.
Speaker 2: Yes, yes. Uh, but they have also in the past, uh,
Speaker 2: developed some mass market condominiums as well. So, so they're
Speaker 2: quite well diversified, so they can do everything from mass market,
Speaker 2: all the way up to high-end developments, and they have
Speaker 2: a wide portfolio of
Speaker 2: Commercial properties from, like, for example, Republic Plaza to hospitality.
Speaker 2: Now some developers do not have hospitality, um, like hotels
Speaker 2: and so on as part of their portfolio they've got
Speaker 2: the Millennium. So which is something we want to talk
Speaker 2: about as well, you know, we've got these different property
Speaker 2: developers in Singapore, Capital Land, Gaoland.
Speaker 2: Land lease, ras property as well. Do you think they'll
Speaker 2: be looking now and saying, oh, this is a good
Speaker 2: time to take advantage and see whether they can maybe
Speaker 2: sort of push city debt aside when it comes to projects?
Speaker 2: I'm not because things are still developing and things are
Speaker 2: changing every day, right? I mean this, this, um, saga
Speaker 2: and so on. I, but I don't think it would
Speaker 2: make city development vulnerable for uh takeover or, or they
Speaker 2: will lose their market share. If anything maybe shifts on
Speaker 2: the board, that's about it.
Speaker 2: Yes, yes, I, I don't, but when it comes to
Speaker 2: property development and and land acquisitions, as long as the
Speaker 2: companies still have the support of the uh of the
Speaker 2: bankers and also of the other stakeholders, I think they can,
Speaker 2: you will be.
Speaker 2: Business as usual in the short term, in the near future.
Speaker 2: The Kwek family, pretty much Singapore's richest family and CDR
Speaker 2: has become Singapore's largest listed property developer back in the
Speaker 2: late 80s with the market value crossing $2 billion. Then,
Speaker 2: thank you to Nicholas Mark for joining us. He's chief
Speaker 2: research officer of PropertyPortalmogul.sg.