CapitaLand seeks to expand in China

Even as property markets have cooled in China, Singapore property developer CapitaLand is forging ahead with its big ambitions there.

Speaking on the sidelines of a talk organised by the NUS Business School on Thursday, CapitaLand’s president and CEO, Liew Mun Leong, said China remains under-urbanised, and there are lots of opportunities to expand its residential and shopping malls there.

China’s booming domestic economy will spur demand for some 12,000 malls in the coming years.

CapitaLand is already making an early move to take part in growing the country’s malls which currently number about 2,500.

Mr Liew said: “Today, our situation is that Singapore is only 34 per cent of our total assets and China is 38 per cent. So obviously, China has a bigger allocation of our assets. And I think the demand in China far exceeds that of Singapore. You are talking of 4 or 5 million people versus 1.3 billion people, so the market is stronger there. And we have indeed allocated more resources to China.”

To date, CapitaLand’s China unit oversees over 50 malls in more than 30 cities like Beijing and Shanghai.

Apart from building malls, the property developer also plans to get a bigger slice of the low-cost housing market.

Its strategy is to offer homes on mortgage at 40 per cent of household income.

While sales volume and home prices have declined in China, Mr Liew remains unperturbed, saying that the cooling measures are part of the regulatory process.

And as a long-term investor, he prefers a more stable property market rather than one full of speculators.

With regard to Singapore, he said the imposition of the 10 per cent Additional Buyer’s Stamp Duty in December was quite drastic.

He said: “In my opinion, I think they need to moderate; they need to manage demand and sales. But the last exercise in my view is too drastic and sudden. Ten per cent is a lot; 10 per cent plus your other duties mean at least a 16 per cent increase in the price of a unit.”

Still, Mr Liew said strong demand continued to prop up private home sales in February.

He said: “If you look at the statistics in the last five or six years, you have an increase of 320,000 people, but the increase in completed homes, dwelling units, is 70,000 units. So there is still a gap between actual demand versus what is available.”

While Mr Liew said the high-end property market has been impacted by the Additional Buyer’s Stamp Duty CapitaLand will not be quick to jump into the mass market segment. But he said that should there be a mass market site with a fairly reasonable price, he would consider it.

But for now, CapitaLand’s sight is set on growing its business in China.

And as it grows beyond Singapore shores, Mr Liew said the company will have more diversity to offer to its 12,000 employees.

He said: “Talent pool is not just about giving them big bonus and salaries. It is also about developing them in jobs that they find interesting. Talented people want this diversity of posting and that is one of our advantage. We are in multi-geography and multi-business.”

Source : Channel NewsAsia – 16 Mar 2012


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