Capital Land Gears Up For Expansion Drive – China Daily – 29-Nov-2014

December 2, 2014 - Uncategorized

CapitaLand, one of Asia’s largest real estate companies, is planning to build four integrated development projects in China annually over the next three years.

“There is still room for growth in China,” says Lim Ming Yan, president and CEO of the Singapore-based company. “From a risk perspective, it shall not be a problem if the investment portion of China exceeds 50 percent.”

CapitaMalls Asia, a regional shopping mall developer under Capita-Land, has 48 percent of its assets in China.

“Although we still hope to keep some business elsewhere, we are focusing on the core markets of China and Singapore,” Lim says, adding that the group is planning to keep intensifying investment in its five “city clusters” of Beijing-Tianjin, Shanghai-Hangzhou-Suzhou-Ningbo, Guangzhou-Shenzhen, Chengdu-Chongqing and Wuhan.

As of now, the company owns 150 real estate projects in China, mainly in these urban clusters.

Lim took over as president and CEO of CapitaLand in early 2013, and carried out a series of reforms, including new appointments and the realignment of operations within the company’s four main business units — CapitaLand Singapore, CapitaLand China, CapitaMalls Asia and The Ascott Limited.

The most recent personnel changes took place in September. Jason Leow, former CEO of CapitaLand China, was appointed as CEO of CapitaMalls Asia. His vacated position was assumed by Lucas Loh, CapitaLand China’s former deputy chief executive and chief investment officer.

“We have streamlined our structure, made it more flexible and carried out other major moves since last year, which are all oriented to our development strategy — our core markets,” Lim says.

CapitaLand currently has about 50 projects, with investment volume of S$36 billion ($28 billion), which are expected to be completed in the next three years. More than half of these are based in China.

CapitaLand is not alone in its “China craze”. Despite the Chinese government’s efforts to curb inflation and surging property prices, foreign investors are still bullish about the market.

In March, the Canada Pension Plan Investment Board announced a plan to invest $250 million in the Chinese real estate market through a new venture with Vanke, the nation’s largest residential developer.

And private equity firms including the US-based Blackstone Group and KKR have raised tens of billions of dollars targeting property investments in the Asian market.

“The foreign investors will show stronger and stronger interests in China’s capital market, especially the real estate market,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia, said in a speech at the 2014 Boao Real Estate Forum in South China’s Hainan province in August.

“The Chinese government started to ease the monetary policies in May, with more than 20 percent growth in fiscal expenditure and more than 20 percent decrease in effective interest rate. This has made investors across the globe view lower risks for a hard landing of China’s economy,” Shen added.

Lim from CapitaLand notes that there have been significant market changes amid the fast urbanization process in China.

“In the preliminary stage of urbanization, residential property enjoyed great market prospects,” he says. “Now, the development direction seems to have shifted to urban infrastructures since 2012 or 2013.”

However, although there are still opportunities available in developing commercial property such as shopping centers, the booming e-commerce platform in China is posing new challenges, according to Leow of CapitaMalls Asia.

“As e-commerce is gaining a larger and larger share of the retail market share, some clients are either reducing the number of their stores or narrowing the store area, which does pose new challenge to us,” Leow says.

CapitaMalls Asia is deploying some new strategies to cope with the changing marketplace. For example, it is integrating its 104 malls in Asia to collect data on the buying habits of their customers.

Leow says although it is easier for Internet companies to learn about consumer preferences by collecting data online, it is more difficult for physical stores.

“So we are gathering the data from our member customers to help the stores better understand their consumption habits, and thus make wise decisions when it comes to selecting the stores’ location, planning and design,” he adds.


China Daily

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