Persistent high interest rates over recent years have adversely affected property developers, resulting in increased financing costs and diminished demand for properties.
As interest rates are anticipated to decline, these developers may finally experience a resurgence.
This analysis highlights three notable blue-chip developers, each with its own strengths: CapitaLand Investment (CLI), City Developments Limited (CDL), and UOL Group Ltd (UOL).
CapitaLand Investment (CLI) — Asset-Light Capital Management Strategy
CapitaLand Investment employs a fee-based model, providing investors with a defensive approach to real estate investments.
For the first half of the fiscal year ending 30 June 2025 (1H2025), CLI reported:
Revenue decreased by 24% year-over-year to S$1.04 billion.
Operating Profit fell 12% YoY to S$260 million.
Net Profit dropped 13% YoY to S$287 million.
Despite subpar financial results, positive trends are visible in key performance metrics.
Recurring fee income improved by 5% YoY to S$572 million, accounting for more than half of the total revenue.
Assets under Management expanded by 17% YoY to S$117 billion.
CLI's lodging platform remained robust, with Revenue per Available Unit (RevPar) enhancing by 5% YoY to S$88, driven by increased occupancy and average daily rate.
Year-to-date through July 2025, over 9,400 units were signed, compared to over 8,000 units in the prior year, and approximately 4,000 units were opened.
Capital recycling reached S$584 million year-to-date as of 13 August 2025.
Recent acquisitions include Wingate's property and corporate credit investment management business in Australia, along with a data center facility in Singapore located at 9 Tai Seng Drive.
The listing of its CapitaLand Commercial C-REIT and the launch of its first onshore master fund in China enhance its fund management segment.
The company's moderate net gearing ratio stands at 0.46 times, with an interest coverage ratio of 3.9 times and an average debt maturity of 3.2 years.
CLI’s fee-focused model reduces reliance on property sales compared to traditional developers, leading to more resilient income and earnings.
Lower interest rates attract increased institutional capital into its real estate funds, elevating valuations and reducing funding costs.
City Developments (CDL) — Specialist in Hospitality and Residential Sectors
City Developments, representing a classic property developer, delivers favorable 1H2025 outcomes.
In its Singapore residential segment, CDL sold 903 units, representing a 54% increase in volume and a 90% increase in sales value YoY.
The take-up rate for its Singapore residential pipeline remains robust, leaving around 740 units unsold from approximately 2,260 units available.
Gross development value for its Global Living Sector surged by 44.4% YoY to S$3.9 billion.
In hotel operations, a crucial revenue segment (43.5% of total revenue), key metrics remained strong.
RevPAR in 1H2025 increased 0.5% YoY to S$155.6, supported by a 1.7% rise in average room rates to S$219.20, even as the occupancy rate dipped by 0.8 percentage points YoY to 71%.
CDL's net gearing ratio is at 70% with an ICR of 2.4 times, and an average debt maturity of two years.
With 57% of its debt at variable rates, CDL stands to benefit from lower interest costs through refinancing, reducing both interest expenses and gearing.
Future Singapore residential projects include Project Zyon Grand, Lakeside Drive, Woodlands Drive, and Senja Close, totaling about 2,000 units.
CDL’s international pipeline encompasses 4,564 units of private rental housing (PRS) and 2,368 student accommodations in the UK, 40 PRS assets (2,246 units) in Japan, and 560 PRS units in Australia.
CDL's extensive hospitality portfolio is likely to benefit from the resurgence in travel, while declining mortgage rates could bolster residential demand for its developments.
Being a more cyclical player than CLI, CDL is positioned for quicker gains from an economic rebound, offering greater potential as interest rates fall.
UOL Group (UOL) — The Versatile and Balanced Developer
UOL Group provides a balanced exposure across residential, commercial, and hospitality properties.
For 1H2025, UOL reported positive developments across its three segments.
In residential, strong momentum was seen with Parktown Residence and UPPERHOUSE at Orchard Boulevard, achieving 92% and 64% sales respectively.
Ongoing projects, such as Pinetree Hill (88% sold), Watten House (95% sold), and Meyer Blue (69% sold), reported high sell-through rates.
Office and retail spaces maintain high occupancy levels at 96.6% and 97.3% respectively, with slight YoY variations.
Increased demand for Pan Pacific Hotels Group's offerings resulted in higher average occupancy rates, climbing from 67.7% to 71%.
Average RevPAR rose by 9.1% YoY to $180.30, highlighting the company's pricing power.
The hospitality pipeline remains strong with 1,634 rooms under development.
UOL’s net gearing ratio is notably low at 0.25 times, with an ICR of seven times.
With 69% of its debt at fixed rates, UOL's balanced debt structure enhances stability.
UOL's diverse asset portfolio ensures resilience across economic cycles.
Interest rate reductions should aid both valuations (NAV uplift) and recovery of earnings.
Sector Outlook
Falling interest rates favor property developers by reducing funding costs, improving margins, and boosting residential affordability and demand.
Their hospitality segments benefit from tourism recovery and lower refinancing costs, while commercial properties and fund management platforms stand to gain from improving valuations and increased capital flows.
Continuing interest rate cuts suggest a multifaceted recovery across residential sales, recurring income streams, and asset valuations.
Three Different Strategies to Leverage Benefits
These three blue-chip Singapore developers offer varied avenues to capitalize on a lower-rate context.
CLI, renowned for its defensive nature, relies on its capital-light model for earnings resilience, with long-term growth derived from recurring fee incomes and expanding lodging frameworks.
CDL provides a cyclical approach with higher upside potential, driven by hotel recovery and residential sales momentum.
UOL takes a balanced stance through its diversified portfolio, offering stability paired with growth opportunities.