News: Frasers Property cautiously optimistic of Singapore’s residential market

Nov 19, 2019

This comes as the group’s net profit for FY2019 fell 25.3% to $560.3 million, due to lower contributions from development projects.

High land price and low take-up rate of properties in Singapore have prompt Frasers Property Limited to take a more careful approach in the Singapore residential market while the company actively evaluates for opportunities in the market.

“Singapore is still our home-ground, but we have to be resilient and not just invest for the sake of investing,” said Frasers Property’s group chief executive officer Panote Sirivadhanabhakdi at the group’s earnings briefing.

The group has been cautious in acquiring residential sites given that land prices remain high while the take-up rate has been slow.

“But we are keeping up with the market and the team has been actively reviewing opportunities,” he added.

In FY2019, Frasers took a $93.95 million write-down to the net realisable value of properties held for sale, reported The Business Times. Of this, Singapore made up $39 million, likely due to its Rivière development at Jiak Kim Street.

The provisions, which are non-cash in nature, “can allow for more marketing initiatives and/or better optionality in trading through Frasers’ residential stocks”, said the group.

Its 455-unit Rivière project moved 46 of the 60 units released for sale as at end-October, while Seaside Residences has sold 768 of its 841 units.

“Residential markets across Singapore, Australia, the UK – while we are cautiously optimistic – are facing headwinds of various kinds,” explained Loo Choo Leong, group chief financial officer at Frasers Property.

“In addition to slowing GDP growth across these markets, there are uncertainties that may come. In order to build a more resilient residential development portfolio, we’ve taken the conservative approach of taking additional provisions to protect our residential businesses going forward.”

Loo believes that lowering prices is not the appropriate route for the group.

“We have to trade through. It is a cyclical business, it is a long-term business. We will have to look at how we build enough gunpowder in order to ensure we will trade through relatively well, given the uncertainties that we see,” he said.

Frasers saw its net profit for FY2019 drop 25.3% to $560.3 million, due to lower contributions from development projects and lower fair value gains. However, this was offset partly by recurring income sources.

For the year ended 30 September, revenue also declined 12.2% to $3.8 billion.

With this, a final dividend of 3.6 Singapore cents was proposed, down from 6.2 cents for FY2018. Including the 2.4 cents interim dividend, total distribution for the year amounted to six cents per share, down from FY2018’s 8.6 cents.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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