CapitaLand, Southeast Asia’s biggest developer, said it returned to profit in the second quarter after rental income from shopping malls and serviced residences increased.

 

Net income was $476.1 million in the three months to June 30 from a loss of $156.9 million a year earlier, the company said in a Singapore stock exchange statement today. Revenue surged 48% to $873.9 million.

 

The recovery in Asia’s economies from last year’s slump has boosted demand for property in CapitaLand’s markets ranging from Singapore to China to Vietnam. Chief Executive Officer Liew Mun Leong is benefiting from unemployment near a two-year low in Singapore where the economy expanded a record 18.1% in the first half, putting it on course to overtake China as the world’s fastest-growing economy this year.

 

“Asia continues to lead the recovery of the global economy,” Chairman Richard Hu said in a separate statement. “Robust economic growth in Singapore, China and Vietnam ensure fundamentals in these markets remain strong and this will generate real demand in the real estate sector.”

 

CapitaLand closed 0.5% higher at $4.08 in Singapore trading today. Its shares have dropped 2.9% this year, compared with a 3.6% gain in the benchmark Straits Times Index.

 

Singapore-based CapitaLand, which has Chinese properties valued at more than $14 billion, sold almost 1,200 homes in Beijing, Chengdu and Kunshan in the first half of 2010, Hu said in the statement.

 

The developer’s assets in China now exceed those in Singapore, Liew said at a press briefing after the results. The company is on track to complete projects in Shanghai and Hangzhou later this year, Liew said in a statement.

 

China’s economic growth slowed to 10.3% in the second quarter from an 11.9% increase in the January-to- March period. Property prices in 70 Chinese cities rose 11.4% in June from a year earlier, though the pace was slower for a second month after the government raised minimum mortgage rates and down-payment ratios for some home purchases and pledged to boost land supply to curb speculation.

 

CapitaLand “expects the housing sector to remain challenging in the second half, but remains positive on the long term outlook of the China property market, given the strong end user demand arising from urbanization and high GDP growth,” according the company’s statement to the exchange.

 

CapitaLand expects to put 3,000 homes on sale each year and the government measures won’t “kill” the market, Liew said.

 

The company said this year it expects properties in Vietnam to make up 10% of its assets in three-to-five years from about 1.5% now. Vietnam’s economy expanded 6.4% in the three months through June, compared with 5.8% in the first quarter.

 

The developer expects the value of its assets in Vietnam to be worth about $2 billion over the next three to five years, Liew said in the statement.

 

CapitaMalls Asia, CapitaLand’s retail property unit, yesterday said its second-quarter profit fell 24% to $113.1 million as it booked a smaller gain from the increase in value of its properties.

 

Without the one-time changes, earnings would have increased six times, it said. CapitaMalls said it’s seeking retail projects in Vietnam, and plans to invest $800 million to $1 billion in the second half in Singapore, Malaysia and China.