(Sept 28): City Developments Ltd (CDL), the property group controlled by one of Singapore’s wealthiest families, fell after it unveiled a plan to invest S$5 billion (US$3.9 billion or RM16 billion) in countries including China and Japan, largely offsetting a divestment drive.

The firm aims to divest S$6 billion of assets either via sales or by putting them in vehicles it manages, it said in an exchange filing Monday. Shares of CDL dropped as much as 6.3%, the biggest intraday decline since March. 

The company’s outlook and succession plans have been a subject of intense discussion among investors after a legal tussle between patriarch chair Kwek Leng Beng and his eldest son, chief executive officer Sherman Kwek, in early 2025. The duo later agreed to settle their differences.

CDL also unveiled plans to set up a dedicated fund management entity with an investment committee and leadership team to double assets under management to S$10 billion by 2029, via new real estate investment trusts, funds, partnerships and joint ventures. 

The market reaction signals investors are growing impatient with the CEO’s ability to deliver after a mixed leadership tenure since 2018. Shares of CDL are now down this year, versus a 23% increase in the benchmark Straits Times Index.

The sell-off came despite positive responses from some bank analysts who cover the stock. DBS Group Holdings Ltd’s Tabitha Foo said investors should “welcome CDL’s much clearer value unlocking roadmap”, while also noting that how the firm executed on the plan should be closely watched. Citigroup Inc, maintaining its buy rating on the stock, also said the new strategy would add value.

Under Sherman, the firm has fallen short of past targets he laid out amid a challenging global environment, such as plans for a UK-focused REIT that was shelved. His tenure has also long been overshadowed by a major soured bet on a debt-laden Chinese real estate developer.

At the same time, Singapore’s largest listed developer by market value has been supported by the broad strength of the country’s residential market, which helped it to more than triple its profits in the first half of the year. 

The firm is doubling down on the Singapore market, where it aims to deploy 60% of the S$5 billion. The next 30% will go to upper-tier cities in China’s residential market, despite a years-long property downturn there, and Japanese assets such as serviced apartments.

CDL signalled a retreat from Australia, where it will aim to sell off 563 living units, its 50% joint venture stake in an office tower in Melbourne and a residential portfolio worth about S$220 million comprising two development sites and four completed projects.

Sherman has said a key priority is to reduce CDL’s net debt-to-equity ratio, which includes the fair value of its investment properties and rose to 75% in the first six months of the year. As part of the review, the firm now wants that to come down to about 55% by 2029.

Other details of the review’s conclusions include:

The release of the strategic review’s findings has been delayed since the middle of this year. Sherman had earlier said the developer’s board and management are not under review, and the 10-member board has signed off unanimously on its conclusions.

The Kweks control about 49% of the firm’s shares. The patriarch and his Malaysian cousin, Quek Leng Chan, dominate the family, which has a net worth of US$25 billion (RM102 billion), according to the Bloomberg Billionaires Index, making them one of Asia’s richest clans.

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