Singapore developer CapitaLand warns of headwinds as profit drops

CapitaLand, Southeast Asia's biggest developer, said prices and sales of Singapore residential properties would moderate because of government measures to curb speculation.

The company sold 139 residential units in the city state in the three months to June 30, 31 per cent fewer than in the same period last year, the firm said in a statement through the Singapore stock exchange yesterday.

Second-quarter profit fell 0.7 per cent on lower portfolio gains, it said. CapitaLand expected some headwinds for Singapore's private residential property market in the near term, its earnings statement said.

The Monetary Authority of Singapore (MAS) introduced a total debt servicing ratio cap of 60 per cent for property loans granted by financial institutions. This was expected to have an impact on residential property sales, CapitaLand said.

"Most developers have been cautious post the latest round of measures," Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian, said.

Singapore home prices rose to a record in the second quarter, leading to the new measures at the end of last month.