Developer hit with S$2.7mil in extension charges

CapitaLand forked out S$2.7 million in extension charges for the 127 unsold units in The Interlace. This works out to S$21,000 per unit or S$7 psf, reported TODAYonline.

Originally, the remaining flats at the 1,040-unit condominium on Depot Road should have been disposed by 13 March, but since paying the charges, CapitaLand’s deadline to sell the leftover properties there has been extended by another six months.

Last month, Real Estate Developers’ Association of Singapore (REDAS) President Augustine Tan estimated that developers in Singapore could bear nearly S$100 million in extension charges for failing to sell their remaining inventory in 2016.

In its latest earnings report, CapitaLand revealed that it has found buyers for 89 percent of the units it has launched so far, adding that the 55-unit The Nassim at Nassim Hill and the 109-unit Victoria Park Villas in Victoria Park Road are set to be unveiled in H1 2016. Its Cairnhill Nine development also posted healthy sales, with 193 out of the 268 units changing hands as of last Thursday (14 April).

Meanwhile, CapitaLand’s revenue declined by 2.3 percent to S$894.2 million in Q1 2016 on an annual basis, mainly due to lower contributions from its developments in Singapore and Vietnam.

Nevertheless, the developer moved 222 residential units with a combined worth S$506 million in the city-state during the period under review, up from the S$197 million it earned for selling 69 units a year ago.

Another reason for the lower revenue is the absence of fair value gain of S$59.6 million arising from the usage change of Ascott Heng Shan Shanghai in Q1 2015. But the drop in revenue was partially offset by higher contributions from residential sales in China, as well as higher rents at CapitaGreen and its serviced residence business.

Despite the dip in revenue, CapitLand’s profit after tax and minority interests (PATMI) surged by 35.4 percent year-on-year to S$218.3 million in Q1 2016, thanks to the divestment of a property in China, Somerset ZhongGuanCun Beijing.