India ‘a tougher market for CapitaMalls Asia’

India’s real estate market is tougher compared with China as the pace of doing business in the country is slower, according to CapitaMalls Asia (CMA).

The retail property unit of CapitaLand, South-east Asia’s largest developer, has 2 per cent of its assets in India, said CMA chief executive officer Lim Beng Chee.

China makes up 42 per cent of its S$6.67-billion assets, the biggest after its home market in Singapore.

“Compared to China, we think there is scope for the pace of doing business in India to be accelerated,” Mr Lim said in an emailed response to queries. “In China, decisions and policies are centrally driven and, as such, the pace of development has been very rapid. India, on the other hand, has a market economy and greater decentralisation in decision-making, which has resulted in the pace of development being a bit slower.”

CapitaMalls, which started in China with a Shanghai project in 2003, now has 42 shopping centres in the country, with plans to open seven this year and another seven starting in 2013, it said in an exchange filing yesterday. In India, the developer began operations in 2006 and has two properties, with plans to open seven new malls starting next year, it said.

In India, “we note that the government has also put on hold plans to liberalise the country’s retail sector”, Mr Lim said.

The Indian government’s attempts to open up the retail sector to foreign investment last month have been stymied by protests from allies and opposition parties.

Asia’s third-largest economy expanded 6.9 per cent from a year earlier, the smallest advance in more than two years, government data on Nov 30 showed.

Property sales have slumped in India’s biggest cities as the Reserve Bank of India raised borrowing costs 13 times by 3.75 percentage points since March 2010 to cool inflation.

CapitaMalls said its investment in India is through its S$880-million CapitaRetail India Development Fund, in which it has a 45.45-per-cent stake. The company has partnered with the Prestige Group, a south India-based developer, for retail projects in the southern cities, and tied up with Advance India Projects for its developments in north India.

The developer opened two malls in India, one in the southern city of Bangalore and the other in Udaipur in the north of the country. The occupancy rates for the two properties averaged 96.1 per cent as of September, according to the exchange filing, in which it called India an “emerging star”.

CapitaMalls will focus on three key markets, namely Singapore, China and Malaysia, and the developer is looking for investment opportunities in Japan, which is an attractive market for the company, Mr Lim said.

Source : Today – 6 Jan 2012

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