CapitaLand to double China assets
Mark O'Neill in Shanghai
The Singapore property player sees changes for the better in Shanghai's real-estate market
CapitaLand, a major investor in China's real-estate market, plans to double investment in the country in the next five years.
Chief executive Liew Mun Leong yesterday said the company had projects in China worth 12 billion yuan (HK$11.24 billion) and would spend a further 12 billion yuan in the next five years.
The Singapore-based company has projects in Shanghai, Beijing, Guangzhou, Wuhan, Dalian, Xiamen, Hainan, Wenzhou and Shanghai.
In Shanghai, it has commercial, residential and serviced apartment projects. Mr Liew welcomed measures by the Shanghai government to make land sales more competitive.
Asked if he was satisfied with Shanghai's system of distributing land - most is sold through private deals with district governments - Mr Liew said a city should have a proper system of land supply.
'There has to be reform. We are happy that Shanghai is reforming. There should be a fairer and more competitive system,' he said.
In 2001, the city introduced measures that allowed land auctions and tenders but gave district officials the right to continue sales through private agreements.
Capital Land China chief executive Lim Ming Yan said more land had been made available for tender this year, a total of 38 sites.
'This is a significant area of land. It is beyond the test stage. The city can seriously implement the land tender system,' he said.
Chau Ching-ngai, the Shanghai property tycoon detained by authorities at the end of May, obtained a large piece of land in the city centre through a private contract with the Jing An district government.
Mr Liew said the major challenge for a developer was access to land. 'It is hard to get the land [in Shanghai] that we want. It is occupied and you have the issue of how to resettle the residents and other costs.'
He praised measures announced by the central bank following the Chau scandal that tightened availability of credit for real-estate projects.
'If developers are weak financially, it is not good for the buyers. These measures will produce strong companies and better quality housing,' he said.
Mr Liew was speaking at the two-day China-Singapore Partnership Forum, attended by more than 200 foreign and domestic businesspeople. Speakers at the forum were bullish about Shanghai's property market.
Nelson Wong, head of Greater China research for Jones Lang La Salle, said Shanghai's 60 per cent level of home ownership exceeded Hong Kong's 50 per cent.
Of the Shanghai homeowners, 40 per cent had bought homes at subsidised prices from state units and 20 per cent had bought them on the commercial market.
Real-estate accounted for 6 per cent of Shanghai's gross domestic product in 2001, up from 2 per cent in 1994, against 10-15 per cent in developed countries, while the proportion of outstanding mortgage loans to GDP was also substantially smaller than in rich countries, figures that showed the room for growth, Mr Wong said.
'We do not detect a bubble at the high end of the residential market. Of properties costing more than 8,000 yuan per square metre, which account for 10 per cent of the total market, half of the buyers are non-Shanghai residents.'
Chris Cuff, executive director of Cushman & Wakefield Premas China, said the vacancy rate of grade-A official buildings was 10 per cent and would fall over the next few years, despite substantial new supply, because of strong demand.