CapitaLand, Southeast Asia’s biggest developer, said third-quarter profit fell 43%, as the sale of shopping malls to subsidiaries reduced rental income and residential development earnings slipped.

Net income fell to $159.6 million in the three months ended Sept. 30 from $281.3 million a year earlier, the company said today in a Singapore stock exchange statement. Revenue slipped to $684.6 million from $1.05 billion.

Lower earnings were “mainly attributable to lower development profits from Singapore residential projects,” the company said in the statement. Rental income fell after CapitaLand sold Clarke Quay to CapitaMall Trust and three shopping malls to CapitaMalls Malaysia Trust in July.

CapitaLand is counting on strong economic growth in Asia to boost demand for property in the company’s markets ranging from Singapore to China. Home prices in 70 major cities in China climbed 9.1% in September from a year earlier, according to the National Development and Reform Commission.

China’s economy grew 9.6% in the third quarter, the government said this month. Singapore expects its gross domestic product to increase as much as 15% this year, eclipsed only by Qatar’s 16%.

CapitaLand closed 0.3% lower at $3.89 in Singapore trading today. Its shares have fallen 7.4% this year, compared with the 8.5% gain in the Singapore benchmark Straits Times Index.

Chief Executive Officer Liew Mun Leong said in August that the developer’s assets in China, which also include serviced apartments and shopping malls, exceeded those in Singapore.

CapitaMalls Asia, CapitaLand’s retail property unit, yesterday said third-quarter profit rose 14% to $68 million, as its retail business benefits from Asia’s economic growth.

“Against a backdrop of firm fundamentals, we are optimistic that all our business units will achieve strong operating performance for the year,” Liew said in today’s statement.

CapitaLand has posted a 23.7% fall in net income to $159.6 million for the 3Q ended 30 September 2010 (3Q2010) compared to $281.3 million for the corresponding period last year (3Q2009). Revenue fell to $684.6 million from $1,046.2 million.

For the nine months ended 30 September 2010, CapitaLand posted a net profit of $751.1 million, four times more than the same period last year.

CapitaLand says strong profit growth was mainly driven by higher development profits, divestment gains and fair value gain on investment properties. Excluding the impact of revaluations and impairments, net profit for the nine months ended 30 September 2010 was $542.4 million, 20% higher than the same period last year. In 3Q2010, CapitaLand achieved a net profit of $159.6 million.

Revenue in 3Q2010 was $684.6 million, bringing revenue for the nine months ended 30 September 2010 to $2,245.8 million, a 6% increase over the same period last year. The revenue growth was mainly due to higher contributions from development projects in Singapore and Vietnam, increased revenue from Australia, as well as higher rental income from serviced residence operations. With the divestment of four malls in Singapore and Malaysia to CapitaMall Trust and CapitaMalls Malaysia Trust, rental income from shopping malls has dropped.

Group Earnings before Interest and Tax (EBIT) for the nine months ended 30 September 2010 was $1,558.8 million, more than triple the same period last year. The strong EBIT growth was mainly due to higher development profits from projects in Singapore and Vietnam and fair value gain from the revaluation of investment properties in China, Australia and the United Kingdom. The Group also recorded divestment gains from the listing of CapitaMalls Malaysia Trust, the divestment of Raffles City Ningbo to the Raffles City China Fund, and the sale of Sichuan Zhixin CapitaLand, Starhub Centre and Robinson Point.

EBIT from overseas operations represented 58%, or $910.9 million, of the group’s total EBIT for the nine months ended 30 September 2010. The group’s core overseas markets of China and Australia were key contributors, accounting for 48% of total EBIT.