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CapitaLand unveils huge real estate expansion plan

2014-12-08 10:37:41Source:China DailyAuthor:

Potential house buyers visit a recent property exhibition in Beijing.[Provided to China Daily]

CapitaLand Ltd, one of Asia's largest real estate companies, plans to add four integrated development projects in China each year in the coming three years, the company's top management said.

"There is still room for growth in China," says Lim Ming Yan, the company's group president and chief executive officer. "From a risk perspective, it shall not be a problem if the investment portion of China exceeds 50 percent."

CapitaMalls Asia, a company under the Singapore-based CapitaLand Ltd, had 48 percent of its assets ratio in China.

"Although we still hope to keep some business elsewhere, we are focusing on the core markets of China and Singapore," he says, adding that the group plans to intensify investment in the 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 and real estate financial products in China, mainly in the above regions.

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

The most recent personnel changes took place in September: Jason Leow, former CEO of CapitaLand China, was appointed CEO of CapitaMalls Asia. His position was taken by CapitaLand China's former deputy CEO and former CIO Lucas Loh.

"We 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 has about 50 projects with investment volume of S$36 billion ($27.58 billion), which would be completed in three years, and more than half of these are in China.

Besides China and Singapore, the company also sees potential in other Asian markets including Malaysia, Vietnam and Indonesia.

CapitaLand is not alone in its "China craze". Despite the Chinese government's efforts to curb inflation and surging property prices, foreign capital is 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 China Vanke Co Ltd, the nation's largest residential developer.

Private equity firms like Blackstone Group and KKR have already raised tens of billions of dollars targeting property investments in the Asian market.

Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd, said in a recent speech at the 2014 Boao Real Estate Forum in Hainan province that foreign investors will show greater interest in China's capital market, especially the real estate market.

The Chinese government started to ease the monetary policies since May, with more than 20 percent growth in fiscal expenditure and more than 20 percent decrease in effective interest rate, which made investors across the globe perceive lower risks for hard landing of China's economy, he says.

"With fundamentals continuing to improve and the addition of more liquidity, there has been a large increase in overseas capital flows, and the trend will continue," he says.

Lim sees market changes amid the fast urbanization process in China.

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

However, in spite of chances in developing commercial property such as shopping centers, the booming e-commerce platform in China is posing new challenges, says Jason Leow of CapitaMalls Asia.

"While e-commerce is gaining larger retail market share, some clients are either reducing the number of their stores or narrowing the store area, which does pose new challenges," Leow says.

To cope with the situation, CapitaMalls Asia is integrating its 104 malls in China to collect data on buying habits of customers.

"It is easy for online stores to learn consumer preferences by collecting data on the Internet, while it is not so easy for physical stores. So we are gathering data from customers to help the stores better understand their consumption habits, so that they can develop ideas for site selection, planning and designing," he says.