(Bloomberg) -- Singapore property firms City Developments Ltd. and CapitaLand Investment Ltd. reported bigger-than-expected declines in full-year profits, after being battered by high interest rates and a global real estate downturn. 

Net income at CDL dropped to S$317 million ($236 million) for the year ended December, down 75% from a record in 2022, the city-state’s largest listed developer said Wednesday. CapitaLand Investment’s profit fell 79% to S$181 million. 

The results cap a tough year for the companies. Singapore’s residential market is cooling, China remains mired in a three-year housing crisis and a commercial real estate slump is reverberating around the world, hurt by the double whammy of high interest rates and post-pandemic remote work.

CDL pointed to higher financing costs and the absence of substantial divestment gains compared to 2022. Real estate investment manager CapitaLand Investment said it was impacted by valuation losses in China and the US. 

Shares of CDL fell 2.5% in Singapore trading on Wednesday, the second-worst performer on the Straits Times Index, while CapitaLand Investment climbed 2.6%. Both stocks have been pummeled in the past year, losing more than 20% of their value. 

CDL’s profit missed the S$358 million average analyst estimate compiled by Bloomberg. CapitaLand Investment’s results fell short of a consensus estimate of S$815 million.

CDL’s results were “resilient” despite an “extremely challenging year for the global real estate sector, with a high interest rate environment, inflation, weak global economies and geopolitical tensions,” Executive Chairman Kwek Leng Beng said in a statement. 

Kwek also highlighted the challenge posed by measures to cool the local housing market. Singapore’s developers sold the fewest private residential units since 2008 last year after authorities raised stamp duties. 

Still, a recovery in residential and hotel earnings has helped to cushion the blow. CDL’s revenue rose 50% to a record S$4.94 billion last year. That beat analysts’ average estimate of S$4.08 billion. In an earnings call, Chief Executive Officer Sherman Kwek said the company is targeting divestments of S$1 billion this year.

For CapitaLand Investment, which is backed by state investor Temasek Holdings Pte, its sizable property holdings in China remain a major drag. About 34% of its S$134 billion in assets under management are in the country, the largest slice of its geographical allocation. It made divestments of S$2.1 billion last year.

Revenue fell 3.2% to S$2.78 billion in 2023, in line with analysts’ estimates. The company said it is on track to meet a 2024 target of S$100 billion worth of funds under management and announced a new goal of doubling it to S$200 billion in the next five years.

CEO Lee Chee Koon said the firm will “optimize” its China portfolio and grow yuan-denominated funds, as well as increase fund product offerings in markets including Japan, South Korea and Australia. 

“I wouldn’t say we are planning to shrink China,” Chief Financial Officer Paul Tham said in a Bloomberg Television interview after the earnings release. “Rather, we are trying to focus on renminbi funds.”

Broader market conditions should turn in the company’s favor this year if interest rates don’t rise further, Tham added. Transaction volumes are likely to pickup in China and other countries, following a difficult year for the sector, he said. 

--With assistance from Nurin Sofia, Haslinda Amin and Anand Menon.

(Updates throughout with company comments after earnings releases)

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