CapitaLand: China will remain a core market going forward

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CapitaLand Group, one of Asia's largest real estate companies, welcomes China's new foreign investment law (FIL) and plans to deploy more resources into the country.

Lucas Loh, President (China and Investment Management) of the Group highlighted a higher level of transparency, a more level playing field, and enhanced legal protection for foreign companies.

“All these will mean a better investment environment and perhaps also lower operating costs,” Loh said.

“And I think that added more confidence and added more optimism from our point of view to deploy more investment into China,” Loh told CGTN in a phone interview.

CapitaLand has over 190 properties comprised of integrated developments, shopping malls, offices, homes and serviced residences across 42 cities in China. The Singapore-headquartered and listed entity has been in China since 1994.

“With the new FIL, it will further enhance our belief in the country. China will remain as a core market for us going forward, and we are optimistic on the further development of the market here,” Loh said.

Lucas Loh, President (China and Investment Management), CapitaLand Group ./Photo provided by company)

In its financial year ended Dec. 31, 2018, China accounted for 48 percent of the group's 74 billion US dollars assets under management.

Meanwhile, Singapore and China made up 89 percent of the group's total earnings before interest and tax in the same year.

When asked if the new FIL addressed enough specifics, Loh said the group would have to look at the execution details that are coming through.

“But directional wise, with the passing of this new law, it certainly points towards the right direction. With a more level playing field between the foreign investor and local players, I think that certainly would enhance our competitiveness in the market.”

This comes as CapitaLand is experiencing slower sales and tenant growth rates in its 52 shopping malls in China.

But Loh pointed towards two things. “Firstly, our base is getting larger over the years, so the percentage increase may reduce even if the absolute amount increases. Secondly, we are seeing more shopping malls opening up in the last few years, so competition has increased,” he explained.

In FY 2018, the group's tenants' sales growth in China came in at 23 percent, vs Singapore's of 1.6 percent.

“But we remain confident and optimistic of retail trade [in China], and we will continue to re-position our malls to meet the changing needs of the consumers.”

In 2018, CapitaLand divested close to 2 billion Sing-dollars worth of non-core assets in China - as part of its portfolio reshuffling strategy. It then redeployed the capital into a mixed-use site Chongqing, and a stake in Shanghai's tallest twin towers (which it inked a joint venture with Singapore's sovereign wealth fund GIC).

(Video filmed by Zhang Kai)