"This is disappointing as the first quarter had also been boosted by the sale of CapitaLand's stake in Hitachi Tower," said ABN AMRO analyst Fera Wirawin. The developer sold its 50 percent share in the Singapore office building for a S$110 million ($81 million) gain in the period.
"CapitaLand is holding up better compared to its peers as its income is more diversified, but we think the property down-cycle has already started in Singapore earlier than expected," said Wirawin, who has downgraded CapitaLand to "sell".
Private home prices in Singapore, CapitaLand's biggest market, recorded a second straight quarter of slower growth in early 2008 as property sales slumped to the lowest in five years, government figures showed on Friday.
CapitaLand derived 39 percent of its pretax income from outside Singapore last year and also earns profits from property trusts it has spun-off in recent years, such as CapitaMall Trust and CapitaCommercial Trust.
CapitaLand posted a net profit of S$247.5 million ($182 million) in the three months to the end of March, compared with S$608.1 million a year ago, in line with analysts' expectations.
The year-ago result had been boosted by a S$426.8 million fair value gain on one of its Singapore office buildings.
But its shares have outperformed its peers this year, rising 11 percent, while City Developments shares lost 12 percent and Keppel Land is down 17 percent. The Straits Times Index fell 9 percent in the same period.
CapitaLand Chairman Richard Hu told investors on Tuesday that its 2008 earnings were unlikely to match last year's S$2.8 billion due to the absence of revaluation gains.
About S$1.1 billion of CapitaLand's profit last year was from gains in the value of properties and investments. The other S$1.7 billion came from selling apartments, trading properties, rent and managing real estate funds.
Residential profits in Singapore slumped 30 percent to add S$39 million in pretax earnings in the first quarter, but this was offset by an 81 percent jump in residential profits from China, which contributed S$65 million.
Australia and CapitaLand's other foreign residential markets improved 9 percent to contribute S$48 million.
"Market sentiment in the property market is expected to remain cautious until a sustained recovery in the financial markets and economic conditions can be foreseen," it said. Nevertheless, the group is confident that it will be profitable in 2008," said the group, which is partly owned by Singapore state investment firm Temasek Holdings.
Singapore property firms have reported disappointing earnings for the quarter ended March 2008, partly due to slower sales in the domestic market.
Singapore's number three developer Keppel Land posted a 3.5 percent fall in net profit, while GuocoLand and Allgreen suffered earnings declines of 93 percent and 65 percent, respectively.