N O V E M B E R 2 1 -2 7, 2 0 14
CHINA DAILY
ASIA WEEKLY
PA G E 2 1
ChinaBusiness
CapitaLand gears up
for expansion drive
SINGAPORE FIRM PROFESSES FAITH IN
FURTHER REAL ESTATE GROWTH IN CHINA
By CHENG YINGQI
[email protected]
YAO JIANFENG / XINHUA
A housing exposition in Shenyang, Liaoning province, which opened on Nov 14. Home sales by floor space in the first
10 months dropped 9.5 percent from a year ago in the 70 cities monitored by the National Bureau of Statistics.
House price falls
ease in October
IMPROVED DATA SHOW GOVERNMENT MEASURES INTRODUCED IN
SEPTEMBER MADE A POSITIVE DENT IN THE PROPERTY MARKET
By ZHENG YANGPENG
[email protected]
The latest property data for
October, released by the National
Bureau of Statistics (NBS), have
provided the first evidence of a
slowdown in falling house prices
since the introduction of government measures in September to
stimulate the market.
The statistics still showed that
new home prices dropped monthon-month in 69 of the 70 cities
monitored, but the largest price
fall was 1.6 percent, compared
with the 1.9 percent largest fall in
September. The only city to show
prices unchanged was Zhengzhou,
the capital of Henan province in
Central China.
The figures mirror other recently
released private-sector data. The
China Real Estate Index System, a
price system run by SouFun Holdings, for instance, showed that the
average price in 100 cities it monitored slipped for the sixth month
running in October, but by 0.4 per-
cent compared with the previous
month’s 0.92 percent fall.
Government measures aimed
at growing the pool of potential
homebuyers were introduced on
Sept 30. These included improving the availability of mortgages
and mortgage terms for first-time
homebuyers and also for secondtime buyers who have fully repaid
their first mortgage.
According to the latest NBS data,
the falling numbers of house sales
also moderated in October, with
aggregate home sales by floor space
in the first 10 months slipping 9.5
percent from a year ago, down from
a 10.3 percent contraction in the
January-September period.
Measured by value, home sales in
the first 10 months dropped 9.9 percent, from the 10.8 percent decline
in the January-September period.
Analysts said that as sales
improve and developers’ inventories fall, they expect the price contractions to continue to ease. But
as developers offer promotions or
discounts to boost property sales
and increase liquidity, any significant price increases are unlikely.
Moody’s Investors Service said
in a recent report that it expected
Chinese house sales to continue
dropping in 2015, albeit at a slower
rate. Nationwide, it predicted sales
will shrink up to 5 percent year-onyear in 2015, compared with the
dramatic 10.8 percent drop in the
first nine months of this year.
In the pre-owned housing market, price declines also eased in
October, according to the statistics
bureau, falling month-on-month in
64 out of the 70 cities. In September,
prices had dropped in all 70 cities.
Beijing saw the largest gain in
pre-owned house prices, rising 0.3
percent over September, which ended six straight months of decline
since April.
“Beijing’s market usually heralds
change in the national market. This
first pickup in pre-owned home
prices indicates the formation of a
new round of positive expectation,”
said Yan Yuejin, an analyst with
E-House (China) Holdings.
CapitaLand, one of Asia’s largest
real estate companies, is planning to
build four integrated development
projects in China annually over the
next three years.
“There is still room for growth in
China,” says Lim Ming Yan, president
and CEO of the Singapore-based company. “From a risk perspective, it shall
not be a problem if the investment
portion of China exceeds 50 percent.”
CapitaMalls Asia, a regional shopping mall developer under CapitaLand, has 48 percent of its assets in
China.
“Although we still hope to keep
some business elsewhere, we are
focusing on the core markets of China
and Singapore,” Lim says, adding that
the group is planning to keep intensifying investment in its five “city
clusters” of Beijing-Tianjin, ShanghaiHangzhou-Suzhou-Ningbo, Guangzhou-Shenzhen, Chengdu-Chongqing
and Wuhan.
As of now, the company owns 150
real estate projects in China, mainly
in these urban clusters.
Lim took over as president and
CEO of CapitaLand in early 2013,
and carried out a series of reforms,
including new appointments and the
realignment of operations within the
company’s four main business units
— CapitaLand Singapore, CapitaLand China, CapitaMalls Asia and The
Ascott Limited.
The most recent personnel changes
took place in September. Jason Leow,
former CEO of CapitaLand China,
was appointed as CEO of CapitaMalls Asia. His vacated position was
assumed by Lucas Loh, CapitaLand
China’s former deputy chief executive
and chief investment officer.
“We have streamlined our structure, made it more flexible and carried out other major moves since last
year, which are all oriented to our
development strategy — our core
markets,” Lim says.
CapitaLand currently has about 50
projects, with investment volume of
S$36 billion ($28 billion), which are
expected to be completed in the next
three years. More than half of these
are based in China.
CapitaLand is not alone in its
“China craze”. Despite the Chinese
government’s efforts to curb inflation
and surging property prices, foreign
investors are still bullish about the
market.
In March, the Canada Pension Plan
Investment Board announced a plan
to invest $250 million in the Chinese
real estate market through a new venture with Vanke, the nation’s largest
residential developer.
And private equity firms including the US-based Blackstone Group
and KKR have raised tens of billions
of dollars targeting property investments in the Asian market.
“The foreign investors will show
stronger and stronger interests in
China’s capital market, especially the
real estate market,” Shen Jianguang,
chief Asia economist at Mizuho
Securities Asia, said in a speech at
the 2014 Boao Real Estate Forum
in South China’s Hainan province
in August.
“The Chinese government started
to ease the monetary policies in May,
with more than 20 percent growth in
fiscal expenditure and more than 20
percent decrease in effective interest
rate. This has made investors across
the globe view lower risks for a hard
landing of China’s economy,” Shen
added.
Lim from CapitaLand notes that
there have been significant market
changes amid the fast urbanization
process in China.
“In the preliminary stage of urbanization, residential property enjoyed
great market prospects,” he says.
“Now, the development direction
seems to have shifted to urban infrastructures since 2012 or 2013.”
However, although there are still
opportunities available in developing
commercial property such as shopping centers, the booming e-commerce platform in China is posing
new challenges, according to Leow of
CapitaMalls Asia.
“As e-commerce is gaining a larger
and larger share of the retail market
share, some clients are either reducing the number of their stores or narrowing the store area, which does
pose new challenge to us,” Leow says.
CapitaMalls Asia is deploying
some new strategies to cope with the
changing marketplace. For example,
it is integrating its 104 malls in Asia
to collect data on the buying habits of
their customers.
Leow says although it is easier for
Internet companies to learn about
consumer preferences by collecting
data online, it is more difficult for
physical stores.
“So we are gathering the data from
our member customers to help the
stores better understand their consumption habits, and thus make wise
decisions when it comes to selecting
the stores’ location, planning and
design,” he adds.