2 Building and Construction Authority, “Construction Demand to Remain Strong for 2025,” 23 January 2025. 3 Urban Redevelopment Authority, “Release of 4th Quarter 2024 real estate statistics,” 24 January 2025. Total construction demand is expected to range between S$47 billion and S$53 billion in 20252. The demand will be driven from both private as well as public sector initiatives such as construction of Changi Airport Terminal 5, the expansion of the Marina Bay Sands Integrated Resort, new HDB flats, the cross-island MRT Line contracts, Tuas Port development, and major road enhancements and drainage improvement. With many of the public sector projects ongoing for the foreseeable future and more in the pipeline, particularly health, educational and community facilities, total construction demand in the medium term is expected to be between S$39 billion and S$46 billion per year from 2026 to 2029. Considering the opportunities in both public and private sector construction, we will continue to seek new projects with attractive returns, given our strong track record in the sector. PROPERTY DEVELOPMENT AND INVESTMENT – CHALLENGING NEAR-TERM OUTLOOK, LONG-TERM FUNDAMENTALS UNCHANGED Recent data have indicated that the property sector is beginning to moderate slightly after reaching frenzied levels in recent years. Private housing pricing increased by 2.3% in the fourth quarter of 2024, with an increase of 3.9% for the whole of 2024. This represents a moderation from the increase of 6.8% in 2023 and 8.6% in 2022. The effects of increased Additional Buyer’s Stamp Duty rates, higher borrowing costs and uncertain economic growth have turned buyer sentiment cautious. Developers sold 6,469 private residential units for the whole of 2024 as compared with 6,421 units in 20233. Despite the relatively muted property market as compared with recent years, in land-scarce Singapore with limited supply of prime locations, property development projects which afford healthy investment returns will always be in demand. While there are no plans for land acquisition in the immediate future, it remains a sector that is of particular interest and importance to the Group. As such, we will continue to be on alert for opportunities which afford an attractive return on investment. In the meantime, we will ensure that we are in a strong financial position to take advantage of such opportunities should they present themselves. HOTEL DEVELOPMENT AND INVESTMENT – TOURISM REVIVAL The Maldivian tourism sector continues to improve, recording 2.0 million tourists in 2024 as compared with 1.9 million tourists in the previous year (an 8.9% increase). Nevertheless, high operating costs impacted the profitability of our investment, with the Group registering a share of losses in our two hotel investments, Mercure Maldives Kooddoo Hotel and Pullman Maldives Maamutaa Resort in which we have a 49% equity interest. We have taken steps to address this, among other measures, restructuring the costs’ structure, which will improve our liquidity. We are also looking at ways to attract more tourists and are currently studying proposals to achieve this. We have initiated the process of selling our minority interest in Katong Holdings Pte Ltd. The sale would enable us to utilise the net proceeds from the sale for our working capital requirements as well as for potential business opportunities. The divestment will allow the Group to focus on other aspects of its business and strategic endeavours instead of having to allocate resources and effort to this investment. BUILDING FINANCIAL AND OPERATIONAL RESILIENCE With the completion of the Group’s disposal of its two commercial properties in Honmachi and Minamihorie, Osaka, Japan in February 2023, the Group’s liquidity has improved with enhanced working capital and stronger cashflow. There are no plans at the moment to reinvest these realised gains from our investments but the Group will not discount future investments which will be beneficial to our portfolio and financial strategy. While raw material costs have stabilised and, in some cases, decreased, operating, manpower and borrowing costs coupled with a slowing economy make it imperative that cost management, 06 KEONG HONG HOLDINGS LIMITED CHAIRMAN’S MESSAGE
RkJQdWJsaXNoZXIy NTkwNzg=