China property

Singapore’s CapitaLand upbeat on China property market as it steps up ‘go digital’ strategy

With almost half of its assets under management in China, Singapore developer eyes internet strategy as new growth engine on mainland

PUBLISHED : Tuesday, 22 March, 2016, 3:01pm
UPDATED : Tuesday, 22 March, 2016, 4:38pm

CapitaLand, Singapore’s largest developer, has shrugged off the gloomy sentiment pervading China’s real estate sector amid an economic slowdown, announcing that it would continue to boost its land bank in the world’s second-largest economy.

Lim Ming Yan, chief executive of CapitaLand, which has almost half of its assets under management in China, said the developer would also strengthen efforts to “go digital” as it believed that fast-growing internet technologies would usher in tremendous opportunities in the world’s most populated market.

“We’ll continue to look for investment opportunities in China’s hub cities,” said Lim. “We also want to implement our ‘Internet Plus’ strategy to fine-tune our services to clients and consolidate our leading position in the market.”

He wouldn’t disclose the size of investment in China, but added that CapitaLand had prepared abundant capital for further expansion.

We are still bullish on China’s market and it’s not unusual that the market witnesses short-term fluctuations
Lim Ming Yan, CapitaLand CEO

China’s economy has slowed with last year’s gross domestic product growing at 6.9 per cent, the slowest pace in 25 years.

The country’s property sector, particularly in lower-tier cities, is grappling with an oversupply as Beijing strives to ease monetary policies and end home purchase restrictions to reduce excessive stockpiles of properties.

But Lim said CapitaLand was unfazed as it continues to focus on mixed-use commercial complexes which require strong financial strength and high management capability.

The Singaporean company was one of the earliest foreign developers to enter China’s property market.

By the end of 2015, CapitaLand’s assets in China were valued at S$21.5 billion (HK$122.6 billion), representing 47 per cent of its total, while China operations contributed 38 per cent to its overall profits following more than two decades of property development and management in the country.

“We are still bullish on China’s market and it’s not unusual that the market witnesses short-term fluctuations,” Lim said.

He added that the company would invest in IT to help enhance efficiency, hoping to create a new business model in the market where the breakneck growth of e-commerce has largely reshaped the commercial landscape.

China has the world’s largest number of internet users, with 668 million people surfing the internet or using mobile technologies.

CapitaLand plans to team up with mainland China internet giants to offer specialised services to cater to shoppers.

Lim said discount coupons and shopping information could be sent via to shoppers via mobile phones before they arrived at commercial complexes.

Last August Ascott, CapitaLand’s wholly-owned serviced residence business unit, led an investment of US$50 million into Tujia, dubbed as China’s equivalent to home-rental website Airbnb.

Ascott also formed a joint venture with Tujia to operate serviced apartments in China, part of CapitaLand’s efforts to tap the country’s O2O (online-to-offline) businesses.

Lim said the company’s Internet Plus strategy was still in an early stage, but CapitaLand was determined to expand the use of new technologies to reinforce its customer-centric principles.

“With the internet, clients may want to shop when they are in the office and work when they are shopping,” he said. “We must adapt to the new situations to provide them the best services in the properties that are under our management.”

He said the marriage between internet-related business and CapitaLand’s traditional property businesses would probably generate a new growth engine for the developer in the mainland market.

In C-Suite on P3, Lim talks about CapitaLand’s new strategy for China