Q2 looks bad on UOL – Profit DROPS 55% on investment losses

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Property developer UOL Group has reported a 55 percent drop-off in net profit to S$68.8 million in the second quarter ended 30 June 2016, due mostly to fair value losses on investment properties.

But group sales in Q2 grew by six percent to S$363.6 million from a year ago, due mainly to higher progressive revenue recognition from residential projects under development, such as Riverbank@Fernvale, Seventy Saint Patrick’s, Botanique at Bartley, and Principal Garden – which was found in 2015 and the upcoming new launch, The Clement Canopy @ Clementi Ave 1

Especially, property development revenue was up 14 percent to S$185.5 million in the quarter.

Meanwhile, UOL stays cautious on the outlook for the housing marketplace. In a statement, Deputy Group CEO Liam Wee Sin said: “Most of our residential projects have achieved comparatively great take up rate due to our strong product aspects. But with the intense rivalry and lack of confirmed sites in the government property sales, our concern is that property prices will be driven to an unhealthy amount.”

At the exact same time, UOL expects office leases to be under pressure from a big supply in the second half of the year. Additionally, it sees retail rents being buffeted by poor retail sales and increased competition.

Quarter 2 in 2016 Auction More homes

The variety of residential properties put up for auction rose by 21.2 percent quarter-on-quarter to 103 units in Q2 2016, according to a Knight Frank report.

While the sector accounted for the majority of auction listings in the second quarter (185 units), Knight Frank noted a deficiency of trades in the prime residential section.

The truth is, the amount of residential properties put up for auction in districts 1, 9, 10 and 11 amounted to only 21 units, the lowest since Q2 2014.

Of these, seven units were put up for auction under mortgagee sale.

“Yet, this is an advancement from the 15.6 percent seen in Q2 2015 (five out of 32 units),” said Knight Frank.

Meanwhile, the variety of landed properties put up for mortgagee sale as a percentage of all landed properties put up for auction reached a record high of 50 percent (17 out of 34 units).

Notably, the absolute variety of landed properties put under the hammer increased by 6.2 percent quarter-on-quarter, but fell by 19 percent year-on-year.

Nevertheless, Knight Frank noted that just one of the 17 landed properties put up for auction under mortgagee sale was found within the prime districts (5.9 percent).

Knight Frank disclosed the variety of non-prime landed properties was the greatest in Q2 2016 at 16 units.