The Motley Fool

Important Differences between City Development and CapitaLand That Investors Have To Know

Sometimes when we have a sector that we’re interested in investing in, there’d be a dilemma when it comes to choosing which company we’d want from within the sector.

For investors interested in real estate outfits, here are some key differences to note between two of the largest property developers in Singapore, City Developments (SGX: C09) and CapitaLand (SGX: C31).

Business segments

CapitaLand is one of the largest property developers in Asia. However, besides its main property development business, its activities also span many different areas within the property space itself.

For instance, it has a property management business housed within its Singapore-listed subsidiary, CapitaMalls Asia (SGX: JS8). CapitaLand is also a major owner of many real estate investment trusts, which in turn owns many hospitality, commercial and retail properties all around Asia. Locally-listed REITs under CapitaLand’s banner include Ascott Residence Trust (SGX: A68U), CapitaCommercial Trust, CapitaMall Trust, and CapitaRetail China Trust. In Malaysia, CapitaLand also has interests in the listed CapitaMalls Malaysia Trust.

Meanwhile, City Developments is a slightly smaller company (the real estate outfit has a market capitalisation of S$9.5 billion as compared to CapitaLand’s S$13.6 billion) with multiple segments as well. In a similar manner to CapitaLand, City Developments is also mainly a property developer. However, the company only has one listed trust in the market, CDL Hospitality Trust (SGX: J85), which as its name suggests, owns hospitality assets in Singapore, Australasia and The Maldives. City Developments also has other hospitality interests (mainly hotels) through its London listed subsidiary Millennium & Copthorne Hotels Plc.

Geographic reach

CapitaLand is largely exposed to the property markets in both Singapore and China with most of its assets based in those two countries. Interestingly, both countries account for roughly the same percentage of CapitaLand’s revenue and profit and together, made up 62% and 88% of the company’s 2013 revenue and profit respectively.

City Developments, on the other hand, operates mainly in Singapore with about 57% of the company’s 2013 revenue coming from here. The company’s next largest market is the United States and the United Kingdom with both countries collectively accounting for 23.7% of the company’s revenue last year. Although City Developments has exposure to the Chinese property market, it is still a very small part of its total business.

Foolish Summary

Although City Development and CapitaLand are the two of the largest property companies listed in Singapore, the geographic exposure of each company has some big differences. For investors choosing between the two, that would be something to note.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.