In Hong Kong, DBS’s commercial real estate exposure is to top-tier names, the likes of CK Asset, Henderson Land and the like. “We have no concerns about the Hong Kong portfolio. The average loan-to-value for our portfolio is below 60%, giving us a lot of cushion. More importantly, the financials of the big Hong Kong names are solid. We carry out valuations every year and more frequently if needed. We have not had to take any valuation adjustments,” Gupta elaborates.
The fallout from US, UK and German commercial real estate, in particular office (to which local companies and REITs are exposed), is unlikely to have much impact on DBS Group Holdings’ credit costs or impairments this year. During a results briefing on Feb 6, DBS group CEO Piyush Gupta said DBS’s exposure to commercial real estate “is about $90 billion”.
“That includes a big chunk of mixed projects comprising retail, residential and office. Singapore accounts for $52 billion or 60% of the total commercial real estate exposure, and the market is quite robust. Hong Kong accounts for $18 billion or 20%, down from $19 billion last quarter, with $13 billion mixed use and the remaining $5 billion equally split between retail and office,” Gupta continues.
