Over at CDL, key plans outlined by group CEO Sherman Kwek, group CFO Yiong Yim Ming, group COO Kwek Eik Sheng and group general manager Chia Ngiang Hong caused much cheer in the market.
CEO Kwek clarified the group’s dividend policy, which is a payout ratio of 33% of net profit. The group has announced a 3-cent special dividend for 1HFY2025. ”We have a two-fold strategy of creating shareholder returns. Given the choice, investors would love to see a bigger dividend, but share buybacks are a good form of capital management and shareholder return, too,” CEO Kwek says.
As he sees it, lower interest rates, especially in Singapore, have been good for all developers. CDL’s share price is up 34% since the start of the year, and on Aug 13, its share price surged 8%. “As we see interest rates gradually tapering down, that’s a big help to our cost of debt. All developers are very interest-rate sensitive because much of what we do is debt-funded,” CEO Kwek says. “Obviously, on top of that is the overall market sentiment and momentum in terms of divestments.”
He is aware that CDL’s management has to execute on its strategy — ensuring that the group divests more than it invests, to bring gearing down to the targeted low 60% or high 50% range. In 1H2025, the $1.2 billion in contracted investments was mainly for residential sites from government land sales (GLS) in Singapore. Residential development in Singapore is CDL’s strength.
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“While gearing could decline with divestments of $1.5 billion, down to 0.6 times from 0.7 times, it is expected to rebound given CDL is in the process of acquiring three sites in Singapore, of which two are executive condominiums. These sites should do well and are not a gearing issue,” DBS Group Holdings says.
Divestments of non-core assets form part of CDL’s asset-recycling strategy. Separately, CDL has built up a portfolio of 7,850 units and beds in the global rental sector with a gross development value of $3.9 billion. This sector is referred to as the private rental sector (PRS) in the UK, and multi-family in the US. CEO Kwek is looking to securitise some of the portfolio through private funds.
Looking ahead, CDL is likely to consider redeveloping Delfi Orchard, Orchard Hotel and Claymore Connect, a shopping centre connected to Orchard Hotel. Orchard Hotel and Claymore Connect are held in CDL Hospitality Trusts, while CDL owns Delfi. In a report in June, DBS estimated a gross development value (GDV) ranging between $2.0 billion and $3.2 billion for the new mixed-use development, translating to a valuation uplift of around $1.2 billion to $2.4 billion or an addition of 74 cents per share to CDL’s revalued NAV.
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“It is a very interesting project combining Delfi, Orchard Hotel and Claymore Connect. We are in preliminary discussions with the authorities to uplift the precinct. It’s a long-term plan. It’s a very beautiful site and we’re very excited. If we proceed, we will enhance the whole area, including St Regis Hotel,” Chia says.
CDL’s UK properties ready for divestment
CDL has four types of projects in the UK — PRS, build-to-sell, commercial/investment property and hotels. The commercial/investment properties comprise Aldgate House, 125 Old Broad Street, and St Katharine Docks, acquired in 2023. St Katharine Docks comprises over 500,000 sq ft of Grade-A office, F&B, retail and residential spaces arranged across four main buildings and supporting ancillary spaces, including a marina with berths for up to 185 yachts. These three properties, valued at around GBP1 billion ($1.7 billion), are earmarked for a REIT listing at the appropriate time.
According to Yiong, CDL has 10 projects in the UK, with five completed, while Ransome’s Wharf was sold. The build-to-sell properties are Teddington, 31 & 33 Chesham Street, Belgravia and Mortlake. Mortlake has received planning permission for development into 1,075 units.
“We’ve got permission to develop Mortlake. We can look at joint ventures, build it ourselves or divest it,” says Eik Sheng.
CFO Yiong reveals that the valuation of the properties held for sale in the UK is $850 million, excluding financing costs. “One of the projects that has a valuation way over what we bought it for is Pavilion,” Yiong says. Pavilion is a hotel site in Knightsbridge.
“Pavilion is a very good site. It’s a good window to look at divestment. We endeavour to get those UK sites sold and unlock a huge chunk of capital. It was a lot of borrowing cost but no income,” CEO Kwek says.
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In China, the Shanghai Xintiandi site is a joint venture with a Xiamen state-owned enterprise (SOE). “We are still applying for planning permission, which should be given very soon, and starting construction towards the end of this year. There are two types of residential developments on the site, high-rise and villa. High rises in the area are being sold at RMB200,000 [around $35,700] psm and the villas are priced at RMB300,000 psm. When it’s time for us to launch in 4Q2026, we hope the pricing will be better,” CEO Kwek says.
During the briefing, Eik Sheng allayed investors’ fears that CDL was planning to acquire 500 hotels over time. “We’ve done very well with the owner-operator model space. We’ve also divested hotels like Hilton Seoul and JW Marriott, South Beach. We will continue with this owner-operator model. The ways we can get to 500 hotels, of course, include management contracts and franchise opportunities. For example, in the Middle East, we currently have 30 hotels on the franchise model. There are many ways we can get to 500 hotels.”
DBS says: “CDL’s chairman [Kwek Leng Beng] targets to grow hotels to 500 and these are mainly management contracts. This is ROE-enhancing.”
Despite a more sedate earnings recovery, analysts have turned increasingly positive on CDL. “Overall, we are constructive on management’s strategic initiatives. The chairman and CEO have reiterated that the “disagreement” is behind them and they want to move forward. With a strategic pivot back to where they have done well (SG residential) and unearthing value within the group, it is the cheapest amongst the large cap developers,” DBS says, as it applauds CDL’s pivot back to its core competencies — residential development and hospitality. “We foresee multiple tailwinds for the group in the coming years, with strong earnings visibility driven by largely pre-sold residential projects in Singapore and an attractive pipeline.”
UOL’s Singapore residential franchise rocks
The core of UOL’s earnings is its Singapore residential development franchise. Operating patmi of $206.6 million, up 45% y-o-y, was attributed mainly to strong performances from most business segments, including the strong performance from property development and property investments. Patmi surged 58% to $205.5 million and included gains from the disposal of ParkRoyal Yangon.
UOL had a successful launch of UpperHouse, which is already 64% sold. Park Town, a joint venture between it and CapitaLand Development, has sold 92% of its units. UOL group CEO Liam Wee Sin observes: “We are always very selective in choosing which site to tender and to participate. We have always been very sensitive to price. The land price is a very big component. The land price tendering seems to be climbing a bit, with the selling price also creeping up, especially in the first half, where most of the sites launched are in the core central region (CCR), which is always at the highest price point.”
“Recent new Singapore launches of Upperhouse at Boulevard (64% sold), Park Town residence (50% JV, 92% sold) present good development earnings visibility. Upcoming launches that are likely to see a good response include Skye at Holland (55% stake) and Thomson View Site (50% stake),” notes an update by RHB Bank.
JP Morgan believes UOL could sell over 1,500 residential units this year, following strong sales launches at ParkTown Residence (1,100 units), and UpperHouse (190 units), on top of sales at existing projects Pinetree Hill, Watten House and Meyer Blue, and the upcoming launch of the 666-unit Skye at Holland in 3Q/4Q2025. “This marks one of the strongest annual sales in over a decade, driven by UOL’s astute site selection and lower mortgage rates, which have now fallen below 2%,” JP Morgan says.
UOL’s investment property performance and divestment proceeds were also better than expectations. ParkRoyal Yangon was sold 30% above book value. On the investment property front, UOL reported rental reversions of 11.4% for its retail, which is higher than the market. CEO Liam says this was for Kinex.
The group has implemented a portfolio reconstitution strategy, which included the sale of the Yangon hotel. Reconstitution identifies non-core assets to divest and recycle the capital to optimise returns by divesting lower-yielding assets above valuation and investing the proceeds into higher-yielding assets. An example is the acquisition of 388 George Street, Sydney, at a net property income yield of 6%.
In Singapore, the redevelopment of Marina Square is still under discussion with the authorities, Liam says. “We’ve made further progress. It’s a long journey. We have been progressing and have made a submission to URA. We have gotten provisional [permission], and finally, hopefully, approval from the authorities,” he adds. Marina Square’s redevelopment comes under the Strategic Development Incentive (SDI), which could result in a valuation uplift. All Liam says when asked about plans is that the design/development is complex and there are multiple stakeholders.
“With its commitment to a sustainable dividend policy backed by recurring income, and given the uplift in operating results, we believe there is potential for higher dividends ahead. In addition, UOL’s healthy net gearing provides ample financial flexibility to pursue value-accretive opportunities, such as the redevelopment of Marina Square, which is expected to deliver a significant value uplift of three times to four times,” says DBS. — with additional reporting by Felicia Tan
