City Developments Ltd. sells majority stake in South Beach to IOI Properties for S$2.75 billion

In Singapore, City Developments Ltd. (CDL), under the direction of billionaire Kwek Leng Beng, has entered into an agreement to divest its majority share in the prominent South Beach development to IOI Properties, a major Malaysian firm led by billionaires Lee Yeow Chor and Lee Yeow Seng. The deal values the entire property at S$2.75 billion (approximately $2.1 billion) and is expected to be finalized in the third quarter of this year. This significant transaction is indicative of CDL's strategy to mitigate financial challenges by reducing its debt levels, particularly in light of a reported 37% drop in net profit for 2024, attributed to decreasing contributions from property transactions and rising financial costs. After the deal's completion, IOI Properties will gain full ownership of the South Beach property, which includes a luxurious JW Marriott Hotel located within a towering 45-story skyscraper, a 34-story office tower, and dedicated retail space. The South Beach Residences, which encompasses 190 units, has already seen full sales since September 2021. This acquisition is part of IOI Properties' broader growth strategy, which gained momentum following the opening of their IOI Central Boulevard Towers, built at a substantial cost of about S$4 billion. This development showcases a significant investment in Singapore, featuring mixed-use facilities designed to enhance the business landscape of the region. The Lee brothers, pivotal figures in this acquisition, have established IOI Properties as a formidable player within the Singapore real estate market while simultaneously overseeing IOI Corp, a large palm oil enterprise. With the brothers collectively worth around $5.2 billion, their strategic expansions in Singapore are crucial as they diversify their business interests beyond palm oil and into real estate, a sector that remains vital for their family's wealth. For City Developments, this sale is not merely a transaction; rather, it signifies a necessary step to stabilize the company amidst difficult financial circumstances. Sherman Kwek, CEO of CDL, emphasized that the proceeds from this divestment will be deployed to reduce overall business debt and will allow the company to focus on selectively developing new residential projects in Singapore, particularly as market demand has softened. CDL's commitment to enhance its project pipeline was highlighted by its recent successful bid for a residential development in Jurong, further affirming its intention to respond to the ongoing urban transformation and decentralization strategies pursued by Singaporean authorities.