Tuesday, February 26, 2013

CapitaLand eyes bigger slice of new homes pie

It will invest here and in China rather than in smaller new markets
The Straits Times - February 22, 2013

PROPERTY heavyweight CapitaLand hopes to treble its share of the Singapore new homes market.

It is also setting its sights largely on investments in Singapore and China, rather than new, smaller markets, through its malls and serviced residence businesses.

Mr Lim Ming Yan, president and group chief executive (CEO), said that while new markets such as Myanmar have surfaced in recent years, its development business will be reserved for markets providing economies of scale.

"For a business like (serviced residence unit) Ascott, Myanmar may make sense for them... (Ascott) can achieve economies of scale with about $100 million worth of investments but for CapitaLand as a group we probably need a billion or two.

"If we talk about a completely new market, we have to be a little bit more measured in our approach as a group. But individual business units... will be in a better position because the threshold to achieve the economies of scale is much lower."

He was speaking at CapitaLand's full-year results briefing at Capital Tower yesterday.

Net profit for the 12-month period ended Dec 31 fell 12 per cent to $930.3 million due to lower revaluation gains and higher impairments. Revenue was up 9 per cent to $3.3 billion year on year.

Mr Lim added that the firm hopes to secure about 8 to 10 per cent of the new home sales market share here. It sold 681 new homes last year - or 3 per cent of the market's 22,290 units sold last year - totalling $1.3 billion.

"We always aspire to be among the top few players in Singapore but we are not going to do this at all costs. We will be rational in our approach in acquiring land... at the right value and at the right price," Mr Lim emphasised.

He said the cooling measures of last month are also expected to moderate sales volumes and selling prices here. Already, CapitaLand has offered discounts of up to 15 per cent at projects such as d'Leedon and The Interlace.

This has boosted sales and reduced the financing risk for d'Leedon. It is now in a comfortable cash-flow position, said Mr Wen Khai Meng, CEO of CapitaLand Singapore.

CapitaMalls Asia - its shopping mall unit - opened nine malls last year and plans to open three this year, including Westgate in Jurong and Bedok Mall.

CapitaLand's China business also enjoyed sales of 3,161 homes last year, more than twice the 1,466 sold in 2011. They had a value of 7 billion yuan (S$1.39 billion) in total.

Earlier this week, CapitaLand also announced plans to develop a $3.2 billion waterfront township in Johor in a joint venture deal.

The economies of both nations complement each other, Mr Lim said. CapitaLand can tap on its operations here with projects over the border as Malaysia is close.

With regard to risk from the upcoming Malaysian elections, Mr Lim noted: "Malaysia's fundamentals have been good... Whoever is in government will obviously want to see economic growth, so in that sense we take a long-term view of what we do in Malaysia."

CapitaLand committed to $4.1 billion of new investments last year and has $5.5 billion in cash.

Earnings per share for the full year stood at 21.9 cents, compared with 24.8 cents a year earlier. Net asset value per share was $3.55 as at Dec 31, up from $3.51 a year earlier. A dividend of 7 cents per share was declared. Shares fell 11 cents to $3.90 yesterday.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)
Email: marshe_inc@yahoo.com.sg

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