CDL spent most of this year telling investors a plan was coming. On Monday it delivered one. The stock fell 8.1%.
City Developments closed at S$7.59 on 28 September, down from S$8.26 the Friday before. It was the worst performer in the Straits Times Index that day, while the STI itself rose 0.3%. Nearly 12 million shares changed hands, about five times its average over the previous seven trading days.
Nor was it a one-day blip. On Tuesday the stock fell another 2.1% to S$7.43. That’s 10% gone in two sessions. By Wednesday the selling had eased, with the stock slipping just 0.5% to S$7.39.
On paper it’s the plan shareholders have been asking for since the boardroom fight of 2025. That February, executive chairman Kwek Leng Beng tried to remove his son Sherman as CEO over poor investment decisions and took him and six directors to court. Within a month the lawsuit was dropped, father and son made peace, and both kept their jobs.
What shareholders wanted after that was a plan. Sell tired assets, pay down debt, pay more dividends, grow a fund management business. So what did the market not like?
What CDL Announced
CDL calls it GET+, a three-year plan running from FY2027 to FY2029. The headline numbers are easy to remember because management made them a countdown.
- 3 years
- 4 sectors, which are residential, commercial, hospitality and living
- S$5 billion of new investments, 60% in Singapore, 30% in China and Japan, 10% elsewhere
- S$6 billion of divestments, 45% commercial, 30% hotels, 20% legacy residential and 5% living
On top of that come four targets it calls PLUS.
- Payout. At least 35% of reported profit (PATMI) paid as dividends every year
- Leverage. Net gearing down to about 55% by FY2029
- Unlock. More than S$1 billion of profit from selling assets above book value
- Scale. Assets under management doubled from about S$5 billion to S$10 billion
CEO Sherman Kwek also said the S$6 billion was “a floor, not a ceiling”, and that CDL is leaving Australia because it’s “not a market that’s really worked out too well for us.”
If the Scale target sounds familiar, it should. CapitaLand drew this map in 2021, when it split into CapitaLand Investment, a listed fund manager that earns fees on other people’s money, and a development arm that was taken private. Keppel followed, selling its offshore and marine business and then M1 to become an asset manager. Hongkong Land joined in 2024, winding down its build-to-sell homes business to grow the real estate it manages to US$100 billion by 2035.
Now CDL is walking the same road. CapitaLand should feel quite proud. CDL’s S$10 billion target is still small next to CapitaLand Investment’s S$136 billion, though.
That’s a clear plan with numbers attached. I’d take it over a vague promise any day. But when you read it closely, a few things stand out.
The Numbers Are Smaller Than They Look
S$6 billion of sales sounds like a lot of value being unlocked. But CDL is putting S$5 billion straight back to work. The net cash released from the portfolio is closer to S$1 billion over three years.
It’s a bit like your rich friend announcing he’ll sell three of his shophouses, then telling you in the same breath that he’s buying two more.
Then there’s the “more than S$6 billion” of cash from property development. That’s money from projects CDL has already sold or already owns, which was coming in with or without a strategic review.
And the 35% dividend payout? CDL already adopted that policy in February, with its FY2025 results. For FY2025 it paid 28 cents a share, a 40% payout. So one of the four PLUS targets is a policy shareholders already had.
Even the S$1 billion of divestment gains comes with a footnote. It assumes the assets sell at their estimated market values as at 31 December 2025. If buyers pay less in a higher-rate world, that number can become smaller.
Investors Were Spooked by China
The allocation that caught the market’s eye was 30% of new money for China and Japan.
Sherman Kwek saw it coming. “Yes, I know when you put China there, everyone’s spooked,” he told reporters. “But again, we have to look at our business in the longer term.”
Some investors wouldn’t forget. In FY2020, CDL wrote down 93% of its investment in Chinese developer Sincere Property. That S$1.78 billion impairment pushed the group to a S$1.9 billion loss for the year. Poor investment decisions were also at the heart of the 2025 boardroom fight. Asking the same shareholders to fund another push into China was always going to be a hard sell.
Debt Comes Down Last
The problem CDL needs to fix today is its balance sheet. Net gearing was 69% at the end of FY2024, 71% at the end of FY2025 and 75% by June 2026, after it bought two government land sale sites in Singapore.
GET+ gets gearing down to about 55%, but by FY2029. That’s three years of selling assets into a market where borrowing just got more expensive, while spending S$5 billion at the same time. Execution is the whole story, and the release gives no timetable for which assets go first.
The Stock Had Already Run a Long Way
Buy the rumour and sell the fact. I think that’s exactly what happened to CDL.
After the truce, CDL’s share price more than doubled, from about S$4.50 in April 2025 to a high of S$10.09 in late February this year.
Some of that was a real recovery. Profit tripled in FY2025 and CDL adopted a higher dividend policy. But some of it was hope that a strategic review would finally close the gap between the share price and what CDL’s assets are worth. When a stock has priced in that much hope, a plan that is merely sensible feels like a letdown.
The stock was already coming back before the announcement. It closed at S$8.26 last Friday, 18% below its February high. After Monday and Tuesday it’s 26% below.
The backdrop doesn’t help either. The US 10-year yield broke above 5.1% last week. If rates stay higher for longer, that’s less rosy for property companies, which borrow heavily to build and whose buildings are worth less when yields rise. With gearing at 75%, CDL feels that more than most.
So Was It an Overreaction?
I think it was a bit of both. Investors bought the rumour and sold the fact, and what they got was a plan when they wanted proof.
The plan itself is sound. Selling about S$1.8 billion of the hotels CDL holds directly, out of roughly S$8.6 billion, is a sensible start. Earning fees on other people’s capital is a better business than tying up your own balance sheet in buildings, which is why CapitaLand, Keppel and Hongkong Land all went this way. And the first half of this year was genuinely strong, with profit tripling to S$301.6 million, even though most of that came from one fully sold executive condo, Lumina Grand, completing in April.
But on Monday investors were asked to wait three years for most of the benefit, and to accept a China allocation before seeing a single divestment. What they wanted was a date and a buyer.
The good news is that proof will show up in the numbers well before FY2029. Watch three things. How fast the first hotel and commercial sales are announced, and at what price against book value. Whether gearing falls from 75% by the FY2026 results in February. And whether the China money goes out before the divestment cash comes in.
If CDL delivers on the first two in the next six to twelve months, this week’s 10% will look like the market being impatient. If it doesn’t, it was the market being right early.
The Kweks own about 49% of CDL. The family has been building property in Singapore for over six decades, and they know better than anyone that the market doesn’t pay for plans. It pays for results.
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