CapitaLand eyeing sites in India, Vietnam

CapitaLand eyeing sites in India, Vietnam


Land prices there have fallen, making it easier to buy


CapitaLand Ltd, South-east Asia’s biggest developer, said that land prices in Vietnam and India have fallen by as much as 15 per cent this year, making it easier to get sites now than a year earlier.


There may be more opportunities in ‘greenfield sites’, chief investment officer of CapitaLand, Kee Teck Koon, said at a property conference yesterday. CapitaLand is also looking at expanding in Japan, where it may acquire properties and set up funds for investments, he said.


‘If there are merger and acquisition opportunities, that’s something we’ll look at,’ Mr Kee said. ‘This is the right time to negotiate for better prices.’


CapitaLand, which owns properties in more than 20 countries, from serviced residences in Berlin to shopping malls in Beijing, made about 76 per cent of its revenue last year outside Singapore, where it’s based. It’s also expanding as the credit crunch amid writedowns by banks on sub-prime related investments weed out smaller competitors.


‘It’s a global liquidity crisis, so the chances of this continuing in perpetuity are very low,’ said Michael Smith, head of Asia real estate investment banking at Goldman Sachs Group Inc. ‘I think one day we’ll look back at 2008 and say this is a real opportunity to invest in Asian real estate.’


CapitaLand said earlier this month that it’s looking for distressed assets in Japan and China to help its expansion in the two markets. The developer already runs two property funds in Japan and teamed up with Mitsubishi Estate Co in a Tokyo project worth as much as US$1.5 billion.


There may also be opportunities to buy Japanese real estate investment trusts on the cheap, Mr Kee said yesterday, as some may have difficulty refinancing short-debt term amid the credit crunch.


CapitaLand may buy more land in Vietnam and India on expectations that ‘there’ll be easier access to choice sites’, Mr Kee said.


CapitaLand set up a US$300 million Vietnam property fund in February and said last year it may increase the number of homes it is building in Vietnam to 6,000 in the next three years. The company also may consider developing offices, shopping malls and leisure centres. The developer is partly owned by Temasek Holdings, Singapore investment company.


CapitaLand also said that plans for Chengdu, the capital of China’s Sichuan province hit by the May 12 earthquake, are on track for the next five years despite initial delays.


CapitaLand, which plans to put 1,500 homes for sale in China this year, said that the Chengdu market remains very ‘resilient and robust’. Still, it’s holding back home sales in Chengdu planned in the fourth quarter as the city settles after the nation’s deadliest quake in 32 years.


‘The underlying demand is still there, and Chengdu has become even more attractive to people in Sichuan province,’ Lim Ming Yan, CapitaLand’s chief executive officer for China, said. ‘After the earthquake, all the buildings in Chengdu are okay, even though they are so near the epicentre. People are thinking of setting up homes there.’


CapitaLand, which owns more than 70 malls in China and developed homes in cities such as Shanghai, Beijing and Guangzhou, made close to 30 per cent of its revenue in the country in 2007, up from 20 per cent in 2006. Last month, it shut two shopping centres in Chengdu, about 50 miles from the epicentre, to assess the safety of the buildings after the quake.


Chengdu, CapitaLand’s fourth-biggest market in China, will be one of the so-called megacities in the country, Mr Lim said, a term used for urban population exceeding 25 million. Chengdu is also drawing investors moving inland as land prices in the coastal cities increase, he added. The developer has land in China to build 35,000 homes.


‘It’s fairly central and it’s got a very good catchment area in the southwestern part of China,’ Mr Lim said. ‘The government is very proactive. They are now looking at how to bring the economy back on its feet.’ – Bloomberg


Source: Business Times


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