CapitaLand eyes more investment opportunities in China

Singapore’s property giant CapitaLand is busy looking at investment opportunities in key markets like China, as part of a strategy to weather the current economic downturn.

The developer has been successful in developing projects in Shanghai and Beijing, and is now looking into second-tier cities on the Chinese mainland.

Last year alone, CapitaLand China more than doubled its earnings to a record US$646 million, and the mainland now accounts for almost half of group profits.

Channel NewsAsia interviewed CapitaLand’s CEO Liew Mun Leong, who is in Hong Kong to receive financial magazine Asiamoney’s award for Singapore’s top executive of the year.

Mr Liew gave his views on his strategy for 2009.

He said: “We would like to call ourselves an aggressive discipline. While we manage our capital, we would develop our business franchise, through the 4-5 sectors that we’re very strong in. We are not just in one sector of real estate. We are in residential, very big, shopping malls.

“We are probably one of the largest shopping mall owners in Asia. We are in offices, in mixed development, Raffles City, and we are in service apartments. So all these franchise will be intensified, but with stringent capital management approach,” he said.

Mr Liew also commented on CapitaLand’s sizeable war-chest of about US$4 billion.

He said: “There are in the crisis period a lot of opportunities in some of these key markets that we’re interested in – Singapore of course, China, Japan even Australia, where we can look at distressed assets, distressed companies.

“We are quite good at managing distressed assets. We have done quite a fair bit in Beijing, in fact. So those are the sort of programmes that we will be scrutinising, but we will not deploy our war-chest so easily.”

On his plans for China, Mr Liew said: “We started out in Shanghai, then we went to Beijing, then two, three years ago, we have gone to Guangzhou area, we have even gone to Chengdu and the western states. We are therefore putting our footprint of CapitaLand in China.

“We are very strong in shopping malls, we have today in our pipeline, 58 malls, 20 in operation and more than 30 being constructed. In fact, we opened more than one mall a month in China this year.

“And frankly there are lot of people courting us to build Raffles City, but it has got to be attractive enough in terms of footage, people walking through.”

Apart from China, Mr Liew also expressed CapitaLand’s interests in other markets, namely Vietnam and Japan.

He added: “Vietnam is very interesting, Vietnam has very strong demand fundamentals. The demographics are very good, a young population, a growing population. Stable government, I would say.

“People are hard-working and there’s a lot of demand for urbanisation. So the physical demand is there. I am also interested in Japan. Japan has grown, some big problems in their real estate and there’s where opportunities can come about.”

On the outlook of Singapore’s residential property, Mr Liew said: “It is not really a question for those who want to buy our real estate, it is not affordability, but timing. And timing is determined now by confidence level.

“And I think right now with what’s happening globally, the confidence level has not been restored. But all our planning is based on baseline recovery in the middle of next year. Hopefully, if the banks recover faster, the economy will be resolved of all its woes, then maybe the end of 2009.”

Source : Channel NewsAsia – 27 Feb 2009

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