London Property Targeted By Office Space Specialist

London Property Targeted By Office Space Specialist

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One of Singapore’s leading property companies is focusing on overseas expansion in a bid to combat its own country’s challenging property market.

City Developments Ltd (CDL) has already bought several properties in central London and further office space belgravia could well be on the agenda.

Kwek Leng Beng, CDL’s executive chairman, said it was not all bad news for its home-based business, however, saying that the country’s hotel and office sectors were still thriving.

Looking at the bigger picture

A limited number of available prime office buildings means office rentals are booming but CDl wants to employ a long-term strategy rather than cash in on current trends. It says it is in no rush to rent out office space in South Beach Tower, for example.

The 34-storey building looks set to be finished later this year and 20 per cent of the available leases have already been secured. Mr Kwek believes that prices will rise even further from the current S$8 a square foot price to as high as S$12, meaning the potential for CDL to achieve a ‘decent yield’ in the long-term.

Mr Kwek added that until the last half of 2013 there was very little interest in office buildings, but now hotels and offices were the ‘hottest’ properties around.

Corporate leasing plans

CDL’s residential business is not experiencing the same boom, however, with sales profits for the first half of 2014 cut by half compare to last year. Property cooling measures have led to a fall in demand for homes.

In a bid to combat the current trend, CDL is looking to use its unsold luxury residential properties for corporate leasing purposes, with a view to converting them into serviced apartment that would complement the company’s hotels business.

Overseas efforts

In contrast, CDL are reporting good progress and performance for its overseas projects. The company invested £157 million in six Greater London freehold properties, including one in Belgravia, Reading, Chelsea, and Croydon and two in Knightsbridge.

It has three ongoing projects in China and is also looking at the development of fund management products. Mr Kwek said this would come later, however, after an ‘attack’ on overseas property developments.

Company history

CDL has been a major force in Singapore’s property sector since 1963. It is now involved in real estate investment and development, hospitality solutions provision, facilities management and hotel management and ownership.

Its network of at least 400 associated companies and subsidiaries spans 25 countries across the globe including Australia, New Zealand, North America, the Middle East, Asia and Europe. The company’s website boasts that it has already set up a UK real estate platform to focus on buying property in central and Greater London for investment and development purposes.

The company owns almost 7.2 million square foot of letting space in hotels, residential, retail, industrial and office buildings across the world. It also has a vast bank of land totaling almost 2.4 million square foot. This has the potential to be converted into more than 7.9 million of additional letting space.

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