SINGAPORE (May 13): APAC Realty reported a 70.6% drop in 1Q19 earnings to $1.7 million from 1Q18 earnings of $5.9 million a year ago.

The operator of ERA real estate brokerage says this was due to a drop in brokerage income contribution as a result of lower transaction volume following the implementation of the cooling measures as well as higher expenses.

Market data released by URA, the national urban planning authority of Singapore, confirmed weakness in the housing market as a result of the cooling measures implemented in 3Q18.

During the period, private residential transactions declined 29.7% from 5,328 units in 1Q18 to 3,743 units in 1Q19.

Revenue for 1Q19 came in at $77.4 million for 1Q19, compared to $105.2 million in 1Q18.

The decline in the group’s revenue was primarily due to a 25.4% decrease in brokerage income from resale and rental of properties to $51 million in 1Q19, and a decrease of 29.9% in brokerage income from new home sales to $23.9 million in 1Q19.

With the decline in revenue, cost of services decreased 26.4% to $67.9 million in 1Q19.

As a result, the group recorded gross profit of $9.5 million in 1Q19, 26.5% lower compared to $12.9 million in 1Q18.

There was also higher expenses of $0.8 million, which included among other items, an increase of $0.6 million in marketing activities and incentives and $0.2 million in operating expenses of a new subsidiary, APAC Investment.

APAC Realty said it had gained 35.6% share of Singapore’s new home market and 45.5% share of the resale and sub-sale market over the past three years

It also has a pipeline of 42 residential projects with 16,500 marketable new home units in Singapore for sale in FY19.

As at March 31, APAC Realty has cash balance of $34.9 million.

In its outlook for the Singapore market, Jack Chua, Executive Director and CEO of APAC Realty, says, “With the ABSD and LTV restrictions in place, demand for Singapore residential properties will continue to remain weak and we expect the operating environment to remain challenging over the next few quarters.”

On the supply front, the total number of unsold private residential units (including executive condominiums) increased 8.6% to 38,710 units as at March 31 from 35,649 units as at Dec 31 2018, and the URA expects a potential supply of 5,200 units (including ecs) from Government Land Sales sites and awarded en bloc sales sites which have yet to secure planning approvals.

The vacancy rate of completed private residential units has declined from a high of 8.9% as at June 30 2016 to 6.3% as at March 31 2019.

Shares in APAC Realty closed 1.5 cent lower at 54 cents on Monday.