City Developments Limited
City Developments Limited
Sales: SGD 2.54 billion ($1.55 billion) (2006)
Stock Exchanges: Singapore
Ticker Symbol: CDL
NAIC: 237210 Land Subdivision; 721110 Hotels (Except Casino Hotels) and Motels
City Developments Limited (CDL) is one of the top two real estate and property development groups in Singapore, and, through its 53 percent stake in Millennium & Copthorne Hotels, a leading hotel group worldwide. The company controls more than five million square feet of rental properties in Singapore, spanning the residential, retail, office, and industrial sectors. The company also holds a land bank of 4.2 million square feet, representing a potential of more than eight million square feet of gross floor area if fully developed. CDL is the force behind many of Singapore’s landmark buildings, including the Republic Plaza, and the Sail@Marina development, which is not only one of Singapore’s tallest buildings, but also one of the ten tallest residential developments in the world. Other properties include headquarters building City House; the luxury high-rise residential development The Oceanfront@Sentosa Cove; the “ultra-luxury” 173-apartment St. Regis Residences, called Singapore’s first branded residential property; and the 700,000-square-foot City Square Residences. The latter development, dubbed a “city within the city,” features a shopping mall, restaurants, a hypermarket, and even its own cineplex movie theater. CDL’s real estate development operations generated nearly 20 percent of the group’s revenues of SGD 2.54 billion ($1.55 billion) in 2006, while rental fees added another 6 percent.
The largest part of CDL’s operations comes from its hotel business, which accounted for 72 percent of the group’s turnover in 2006. Millennium & Copthorne Hotels (MCH) is one of the leading hotel groups in the Asian region, and one of the top 40 in the world, holding properties in 20 markets worldwide. MCH is especially active in England, where it owns 20 hotels, while the United States is that company’s single largest market. Altogether, CDL operates through 250 subsidiaries, including Target Realty Ltd., and a 52 percent stake in publicly listed City e-Solutions Ltd.CDL itself is controlled by the Hong Leong Group, Singapore’s largest conglomerate. Chairman Kwek Leng Beng is also that city-state’s richest person.
SINGAPORE PROPERTY DEVELOPMENT PIONEER IN 1963
City Developments Limited (CDL) was founded in 1963 at a time when the real estate development market in Singapore was virtually nonexistent. Working from a rented office, and with just eight employees, CDL initially focused on acquiring property, which it then developed into residential, office, and other complexes, which were then sold at a profit. In order to raise capital for its property purchases, CDL went public early on. By the end of 1963, the company had achieved a listing on the former Malayan Stock Exchange, prior to the breakup of the Malayan and Singaporean exchanges.
CDL’s first successful development was finished in 1965. That project, called the Fresh Breezes and located in Johore Bahru, also brought the concept of the model home to Singapore. Other CDL projects completed during the second half of the 1960s included City Towers, the city-state’s first high-rise residential development, in 1966, and the Clementi Park, the first condominium developed by the company.
By the early 1970s, CDL had become one of the most active and successful of Singapore’s real estate developers. That period also marked the beginning of the city-state’s economic boom, as the Singaporean government embarked on a strategy of developing the city into one of the Asian region’s main financial centers. As a result, Singapore’s real estate market promised to become one of the most vibrant and profitable in the world. This fact caught the attention of the Hong Leong Group, which had established itself as Singapore’s leading conglomerate, with highly diversified interests, including especially construction materials.
Hong Leong had itself been founded in 1941 by Chinese immigrant Kwek Hong Png. Born into an impoverished family in the Fujian province of China, Kwek had come to Singapore as a teenager, along with three brothers, in 1928. Under British colonial rule, Singapore’s large Chinese immigrant community became the state’s financial leaders. By the end of the 1940s, Kwek’s own business had become one of the dominant companies in the area. Kwek was later joined in the business by son Kwek Leng Beng, who had studied law in London, before entering Hong Leong in the 1960s.
Hong Leong acquired a controlling interest in CDL in 1972, setting the company on the next phase in its growth. Backed by Hong Leong’s huge resources, CDL expanded beyond the residential property market in the 1970s. The company completed a number of high profile industrial and commercial developments. These included the city’s first combined residential and commercial project, the City Plaza. By the end of the decade, the company had also completed several more large-scale projects, including the Tanglin Shopping Centre, the Golden Mile (originally known as Woh Hup Complex), the Queensway Shopping Centre, and the Katong Shopping Centre.
CDL had emerged as one of the top players in the bristling Singaporean real estate market in the 1980s. The company crowned its achievement with the completion of the City House, located in Singapore’s Central Business District, which also became the company’s headquarters.
The 1980s marked a new era in the Singapore real estate market, as the city entered an extended building boom. CDL helped lead that market, completing more than 20 residential developments during the decade. While the company generated revenues through rents and leasing from these developments, it also developed other properties for sale. By the end of the decade, CDL had completed and sold 12 major real estate development projects.
As Kwek Hong Png approached retirement, son Kwek Leng Beng, who had long been carefully groomed by his father to take over all of the Hong Leong Group, took a more active role in guiding CDL’s direction. The younger Kwek became especially interested in the hotel sector. In 1989, Kwek led CDL to make its first hotel acquisition, of the King’s Hotel in Singapore. This purchase was soon followed by the acquisition of another prominent Singapore hotel, the Orchard Inn.
Our Vision: To maintain industry leadership in innovation, product quality, service standards, profitability and community work.
Our Mission: For Customers: To offer quality and innovative products, unsurpassed service and value for money. For Investors: To maintain profitability and optimum returns for their investment. For Employees: To maximise the potential of staff and care for their personal well being and career development. For the Community: To share the benefits of our success with the needy and to care for youth development and the environment.
CDL had long focused its real estate development operations on the Singapore market. At first, its hotel operations followed suit, as the company acquired new properties in Singapore. By the early 1990s, and amid the collapse of the worldwide real estate market, CDL had become interested in expanding its hotel business on a more international basis. The company’s decision to boost its hotel operations came especially after Kwek Leng Beng took over at CDL, and Hong Leong, as chairman in 1990.
With nearly unlimited funding provided by the massive Hong Leong conglomerate, Kwek launched an ambitious acquisition strategy. Kwek especially took advantage of the collapse of hotel prices in the early 1990s, a strategy he readily acknowledged. As he told Fortune in 1995: “When the market hits rock bottom and nobody dares to buy, I come in.”
Into the early 1990s, CDL’s hotel operations developed a growing international focus. The company initially remained within the Asian Pacific, adding the Regent in Kuala Lumpur, venturing into the Philippines with the purchase of the Heritage Hotel in Manila, and extending into Taiwan with Taipei’s Grand Hyatt. These acquisitions clearly pointed, as did much of CDL’s real estate development work, to the company’s focus on the high-end and luxury markets.
CDL’s hotel operations soon became more global in scope. Kwek’s experience in London naturally led him to target that city for the next phase in CDL’s international expansion effort. In 1993, the company entered London, buying the Gloucester Hotel. CDL also joined in a consortium gaining control of New Zealand’s Brierley Investments, which owned 13 hotels in that market, and also controlled England’s Thistle Hotels group.
Kwek took CDL on a spending spree, paying out more than $1 billion into the middle of the 1990s to boost the group’s hotel portfolio to more than 55 hotels, including such major hotels as the Hilton and Plaza Hotels in New York City. The company also acquired the Hotel Millennium in New York City. That hotel provided a good representation of Kwek’s business savvy and sense of timing, with Kwek scooping up the hotel, built at a cost of $150 million, for just $75 million. That purchase also gave CDL a new flagship name for its hotel operations, Millennium. The company began rebranding much of its hotel network under the new name. The company added a second key brand in 1995, following the acquisition of the Copthorne Hotel Group from Aer Lingus.
The addition of Copthorne led CDL to restructure its hotel holdings, placing its non-Asian assets into a new company, Millennium & Copthorne, which was then listed on the London Stock Exchange. CDL retained a 53 percent stake in Millennium & Copthorne, initially through another publicly listed vehicle, CDL Hotels International, which held a listing on the Hong Kong Stock Exchange. In a restructuring of its organization in 2000, CDL took direct control of its Millennium & Copthorne holding. CDL Hotels International was then renamed as City e-Solutions, reflecting its new focus as a provider of Internet-related travel and hospitality services.
With the new century, CDL’s hotel operations represented the company’s major focus; in 2006, hotel operations generated 72 percent of the group’s total revenues. Nonetheless, CDL remained a highly active real estate developer, claiming a spot among Singapore’s top two. In 2000, for example, CDL was joined by parent Hong Leong Group in the acquisition of a 50 percent stake in the luxury condominium project Cuscaden Residence being developed by Hotel Properties.
- City Developments Limited (CDL) is founded.
- CDL is acquired by the Hong Leong Group, founded and led by Kwen Hong Png and son Kwek Leng Beng.
- CDL builds new headquarters, City House, in Singapore’s Central Business District.
- Company acquires first hotel, the King’s Hotel, in Singapore.
- Company acquires Gloucester Hotel in England as part of internationalization of hotel business.
- CDL spins off non-Asian hotel operations into Millennium & Copthorne Plc, listed on the London Stock Exchange.
- Company completes The Sail@Marina Bay development, which sells out in just weeks.
In the beginning of the 2000s, CDL began making plans to extend its real estate development operations beyond Singapore. The company eyed an entry into a number of markets, such as Vietnam and the mainland Chinese market. The difficult economic climate, however, and especially a long five-year slump in its core Singapore market, forced the company to put its foreign expansion on hold.
Nonetheless, the company remained actively involved in pursuing new developments in Singapore. The company became involved in a number of the city’s highest-profile developments. These included the massive The Sail@Marina Bay project, built to resemble a sail along the government-initiated Marina Bay waterfront area. Launched in 2005, The Sail quickly sold out in just weeks. At the same time, CDL began preparing the launch of another high-profile site, the St. Regis Residences, a 173-unit “ultra-luxury” condominium complex that also was the first brand-name CDL project.
Other major CDL developments into the last half of the first decade of the 2000s included The Oceanfront@Sentosa Cove, a luxury high-rise development; the 66-story Republic Plaza; and the 700,000-square-foot City Square Residences. The latter, called “The City within the City” by CDL, provided not only residential apartments, but also featured retail shops, restaurants, its own hypermarket, and a multiplex movie theater. CDL’s commitment to new developments despite the slump in the Singapore market had meanwhile positioned the company to profit from the new upswing in the second half of the decade. With more than five million square feet of developed property under its control, and a landbank of more than 4.2 million, with a potential total gross square footage of over eight million, CDL remained one of the dominant players in Singapore’s real estate sector.
M. L. Cohen
CDL Hotels Holdings New Zealand Limited; CDL Investments New Zealand Limited (63%); Grand Plaza Hotel Corporation (66%); KIN Holdings Limited (61%); Millennium & Copthorne Hotels (52%); Republic Hotels & Resorts Limited; Target Realty Limited (99%); ATOS Holdings AG (Austria); CDL Hotels New Zealand Limited (70%); CDL Hotels USA Inc.; CDL Investments New Zealand Limited (43%); KIN Holdings Limited (New Zealand; 43%); Kingsgate International Corporation Limited (New Zealand; 43%); M&C Management Services (USA) Inc.; Millennium Hotels & Resorts Services Limited (U.K.); Millennium Partnercard Services Limited (U.K.); Quantum Limited (New Zealand; 49%); Tara Hotels Deutschland GmbH.
SembCorp Industries Ltd.; Jardine Cycle and Carriage Ltd.; Keppel Corporation Ltd.; Hong Leong Investment Holdings Private Ltd.; CapitaLand Ltd.; Fraser and Neave Ltd.; CapitaLand Residential Ltd.; WBL Corporation Ltd.; Wing Tai Holdings Ltd.
“CityDev Builds for the Future,” Vietnam Investment Review, March 7, 2005, p. 22.
Hong, Nguyen, “Singaporean Firms Eye Property Projects in South,” Vietnam Investment Review, October 17, 2005, p. 18.
Kraar, Louis, “The Mystery Man Who Took the Plaza from Donald Trump,” Fortune, December 25, 2005, p. 50.
“Major Singapore Property Firms to Enter Xinjiang,” Straits Times, August 27, 2001, p. 3.
“Southeast Asia Property Profits Up,” Vietnam Investment Review, February 20, 2006, p. 23.
Tong, Sebastian, “Kwek Makes Waves in Singapore,” Reuters, May 12, 2006.