Keppel beefs up Chinese footholds as cooling measures dim Singapore prospects

Of the 4,440 homes it sold in FY18, half were in China.

Keppel Corporation is turning to select property markets like China in a bid to court growth as cooling measures back home may be dragging on its residential segment, according to OCBC Investment Research (OIR).

"Whilst property cooling measures in China have had an impact on the market, urbanisation trends and growing income levels are projected to continue driving demand for quality housing and commercial developments in key regions," OIR's analyst Low Pei Han said in a report. adding that China’s Jing-Jin-Ji region, Yangtze River Delta, Greater Bay Area and the Chengdu metropolis pose considerable growth potential for the firm’s property division. 

In fact, half of the 4,440 homes the firm sold in FY18 were in China as the firm’s property business outperformed other segments.  

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Keppel’s property division recorded a 44% increase in profits to $938m, contributing the largest to the firm’s 2018 earnings which skyrocketed 382% to hit $944m. Amidst lower value gains from its investment properties and contributions from property trading, the increase in property revenue was attributed to the en-bloc sales of development projects as well as gains from the divestment of a stake in a Beijing commercial project, Keppel’s financial statement highlighted.

Also read: Keppel's 2018 profits skyrocketed 382% to $944m as property arm outperforms

“Keppel Land’s return on equity (ROE) was 11.4% in FY 18,” Low added. Going into 2019, the firm stated in its financial statement that it would remain focused on strengthening its presence in its key markets like China, Vietnam and Singapore

Developer CapitaLand has also been achieving wider margins from its Chinese residential business as it launched four residential projects in Chengdu, Wuhan, XI’an and Kunshan which sold over 90% of units across all projects in October. The firm also expects to recognise around $1.27b of revenue from China by Q4, according to analysts.