Residential developers hit with massive impairment charges on back of sales dearth

Most developers missed earnings targets in Q4.

Some of Singapore’s largest property developers booked large impairment charges in the fourth quarter, due mainly to the prevailing weakness in the residential property market.

According to Maybank Kim Eng, most developers’ earnings fell short during the quarter. The earnings of 83% of developers under Maybank’s coverage fell short in Q4. From 4Q13 to 3Q14, only 33% of developers under the house’s coverage disappointed.

Maybank Kim Eng noted that a particular trend that emerged last quarter was that market softness prompted developers to take impairment charges for some residential projects.

“CapitaLand stress-tested its residential portfolio in Singapore and booked an impairment charge of SGD77m. City Developments took a SGD24m hit for foreseeable losses from its development properties. OUE similarly made an allowance of SGD105m for OUE Twin Peaks, its high-end project in Leonie Hill. Some 386 of this project’s 462 units remained unsold,” stated Maybank Kim Eng.

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