South Beach | Image credit: City Developments Limited, CDL
Sustained high interest rates over the last few years have impacted property developers negatively through higher financing costs and softer demand for properties.
With interest rates expected to trend lower, it might finally be time for them to shine.
Here, we put the spotlight on three blue-chip developers with unique strengths: CapitaLand Investment (CLI), City Developments Limited (CDL), and UOL Group Ltd (UOL).
Capitaland Investment Limited (SGX: 9CI), with its fee-driven model, provides investors with a defensive option for real estate exposure.
CLI posted the following results for the first half of the year ended 30 June 2025 (1H2025):
Revenue slumped by 24% year on year (YoY) to S$1.04 billion.
Operating Profit decreased 12% YoY to S$260 million.
Net Profit declined 13% YoY to S$287 million.
While its latest financials are disappointing, there are some encouraging signs in their key operational metrics.
Recurring fee income increased 5% YoY to S$572 million (making up more than 50% of total revenue).
Assets under Management grew 17% YoY to S$117 billion.
CLI’s lodging platform remains resilient, with Revenue per Available Unit (RevPar) increasing 5% YoY to S$88, driven by a higher occupancy rate and average daily rate.
Signed units increased YoY, with more than 9,400 units signed year-to-date through July 2025 (compared to over 8,000 units in the prior year period), while opened units reached approximately 4,000 units
Capital recycling reached S$584 million YTD as of 13 August 2025.
New acquisitions include Wingate’s property and corporate credit investment management business in Australia, and a Singapore data centre facility (9 Tai Seng Drive).
The listing of its CapitaLand Commercial C-REIT, alongside its recent launch of its first onshore master fund in China, bodes well for its fund management segment.
The company is moderately geared, with a net gearing ratio of 0.46 times, an interest coverage ratio (ICR) of 3.9 times, and an average debt maturity of 3.2 years.
CLI’s fee-driven model results in less reliance on property sales compared to traditional developers; its income and earnings are, therefore, more resilient.
Lower interest rates lead to an increase in institutional capital inflow into its real estate funds, increasing valuation and reducing funding costs.
City Developments Limited (SGX: C09) provides an option for investors seeking exposure to a traditional property developer.
CDL reported encouraging 1H2025 results.
Its Singapore residential segment saw 903 units sold, representing an increase of 54% in volume and 90% in sales value YoY.
Take-up rate for its Singapore residential pipeline remains solid, with around 740 units unsold from approximately 2,260 units in the pipeline.
Gross development value (GDV) for its Global Living Sector soared 44.4% YoY to S$3.9 billion.
Meanwhile, its hotel operations, which is a key revenue contributing segment (43.5% of revenue), reported encouraging metrics.
Revenue per available room (RevPAR) in the first half of 2025 increased 0.5% YoY to S$155.6, driven by a 1.7% increase in its average room rate to S$219.20, offset by occupancy rate declining 0.8 percentage points YoY to 71%.
CDL has a net gearing ratio of 70% with an ICR of 2.4 times, and an average debt maturity of two years.
A majority of its debt profile is variable rate (57% of debt); CDL will benefit from lower interest costs as it refinances its upcoming debt, leading to lower interest costs and reduced gearing.
Some upcoming Singapore residential launches include Project Zyon Grand, Lakeside Drive, Woodlands Drive, and Senja Close, totalling around 2,000 units.
CDL’s overseas pipeline includes 4,564 units of private rental housing (PRS) and 2,368 student accommodations under development in the UK, 40 PRS assets (2,246 units) under development in Japan, and 560 PRS units in Australia.
CDL’s strong hospitality portfolio should benefit from a travel rebound, while lower mortgage rates could lift residential demand for its development projects.
As a more cyclical player compared to CLI, CDL is positioned to benefit more rapidly from an economic upturn, offering investors greater upside potential as interest rates decline.
UOL Group Ltd (SGX: U14) offers a balanced mix of residential, commercial, and hospitality property exposure.
UOL provided a positive 1H2025 update for its three segments.
Its residential segment saw strong momentum with new launches such as Parktown Residence and UPPERHOUSE at Orchard Boulevard, achieving 92% and 64% of units sold respectively.
Ongoing projects also reported high sell-through rates: Pinetree Hill at 88%, Watten House at 95%, and Meyer Blue at 69% sold.
Office and retail occupancy levels remain high at 96.6%, up 3.2% YoY, and 97.3%, down 2.1% YoY, respectively.
Meanwhile, its hotel performance through Pan Pacific Hotels Group saw increased demand, with average occupancy rates increasing from 67.7% to 71%.
Average RevPAR also increased 9.1% YoY to $180.30, showcasing the company’s pricing power.
The hospitality pipeline remains robust with 1,634 rooms in development.
UOL has an extremely low net gearing ratio of 0.25 times and an ICR of seven times.
It has a balanced debt profile where 69% of debt is fixed-rate.
UOL’s diversified portfolio of assets provides stability across cycles.
Rate cuts should support both valuations (NAV uplift) and earnings recovery.
Falling interest rates are a boon for property developers as lower funding costs improve margins and enhanced affordability drives residential demand.
Their hospitality segment gets a dual boost from both a tourism recovery and reduced refinancing costs, while commercial properties and fund management platforms should see uplift from improving valuations and increased capital flows.
With rate cuts expected to continue, the sector is positioned for a multi-faceted recovery across residential sales, recurring income streams, and asset values.
These three blue-chip Singapore developers offer distinct ways to benefit in a lower-rate environment.
CLI is a defensive stalwart; its capital-light model provides earnings resilience, with long-term growth driven by recurring fee income and its expanding lodging platform.
CDL offers a more cyclical play with potentially greater upside from hotel recovery and residential sales momentum.
UOL presents a balanced approach through its diversified portfolio across residential, commercial and hospitality assets, combining stability with growth potential.
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Disclosure: Wesley does not own shares in of the companies mentioned.
The post Property Developers in a Lower-Rate World: CapitaLand, CDL and UOL Under the Spotlight appeared first on The Smart Investor.
