CapitaMalls in Suzhou tie-up with Chinese firm
CapitaMalls Asia, a Singapore-listed shopping centre developer, has unveiled plans to build the biggest shopping and commercial office project in Suzhou.
The move comes as foreign developers exploit government measures to curb the property boom, such as cutting property prices and tightening developers' cash position.
The developer's project in the second-tier city is 30 minutes away by train from Shanghai. It will include a seven-storey shopping complex with 250,000 square metres of gross floor area, and two 20-storey office towers totalling 60,000 square metres. The firm did not give an opening date.
Estimated to cost 6.74 billion yuan (HK$8.2 billion), the Suzhou project is an equal joint venture between CapitaMalls Asia and Suzhou Industrial Park Jinji Lake Urban Development.
The project aims to gain from the shift inland of the production plants of multinational firms from coastal areas. 'The project will tap into the strong population catchment of about 700,000 in Suzhou Industrial Park,' CapitaMalls Asia chief executive Lim Beng-chee said yesterday.
CapitaMalls Asia is among the region's leading shopping centre developers, with 97 properties across 51 cities in Singapore, China, Malaysia, Japan and India, worth a combined S$6.19 billion (HK$37.2 billion).
Market observers said foreign developers, which tend to have more funds than their mainland counterparts, were taking advantage of the property market's decline to acquire projects.
'Many local developers are short of cash because of the credit tightening measures,' said an analyst who asked not to be identified. 'It is a chance for developers from Hong Kong and overseas to snap up commercial projects and ride the China growth story.'
For example, Greentown China, a Hong Kong-listed mainland developer, recently reported a net leverage ratio of 267 per cent for the first half, with debt reaching 34.6 billion yuan.
In contrast, Hong Kong developer Hang Lung Group had a leverage ratio of zero, according to its full-year results for last year, and it used its net cash position of HK$7.37 billion to acquire two pieces of land in Kunming for commercial development at a cost of about 3.5 billion yuan.
CapitaMalls Asia, which has net cash of $S1.19 billion, would continue to expand on the mainland, said Lim.
However, the pace of expansion would be slower than its original plan to build 100 shopping centres in the next three to five years, he said, reflecting the slower economic growth on the mainland and globally.
CapitaMalls Asia has 55 shopping centres in 35 mainland cities, of which 15 are under development. Lim also said yesterday that CapitaMalls Asia had applied for a secondary listing on the Hong Kong stock exchange. The stock is due to begin trading in the middle of next month.
Although no new shares will be issued as a result of the secondary listing, Lim said the developer would seek to access mainland investors through the Hong Kong stock market when market sentiment improved.
'One of the things lacking in Singapore is access to China investment money,' Lim said, adding that Hong Kong was the platform to reach out to mainland investors. He said the firm was under no pressure to raise funds because of its strong cash position, but it would raise its profile in Hong Kong, where it does not develop or own any shopping centre businesses. CapitaMalls Asia shares closed up 1.7 per cent at S$1.22 yesterday.