Singaporean property developer CapitaLand (C31.SIN) wants China-based holdings to account for 45% of its total assets, compared to 36% at present, such is the company’s confidence in the long-term growth potential offered by the Chinese economy. CapitaLand – which booked a fourth quarter net profit of US$627 million, up from US$55 million a year ago – has 100 projects in 14 cities in its China portfolio, worth over US$14 billion. In January, it said it would buy Orient Overseas International’s China property unit for US$2.2 billion, translating into an additional seven mixed-use properties in Shanghai and Tianjin.
Filing its fourth-quarter results with the Singapore exchange, CapitaLand said China’s recent property boom cannot be labeled as a bubble and that current market conditions are driven more by physical demand rather than supply and loose credit conditions. It added that it is “comforting to note that the central government is taking steps to rein in the market – we will be more worried if the government does nothing about it.”
CapitaLand’s diversified approach to the Chinese property market – it offers everything from mixed-use facilities to serviced apartments whereas most domestic developers focus primarily on residential real estate – is intended to deliver long-term, sustainable growth. Ant it appears to be paying off. China Resources Land (1109.HK) and China Overseas Land & Investment (0688.HK) are among the mainland developers who follow a similar multi-prong strategy. They will be encouraged by CapitaLand’s confidence in the domestic market.