ST : CapitaLand to build affordable housing in China

Jun 6, 2010

CapitaLand to build affordable housing in China

By Robin Chan

Promising to be a long-term player in China, Singapore's property giant CapitaLand wants to make its name as a builder of affordable homes for the Chinese.

It will do this with standardised designs and more control over costs and land, CapitaLand's president and chief executive Liew Mun Leong revealed for the first time.

This approach will give it an edge over Chinese developers in the growing urban property scene, Mr Liew told reporters on the sidelines of the Asian Investment Conference and Exhibition (AICE) at Suntec Convention Centre yesterday.

The Chinese government is now reining in the property market with a slew of cooling measures. As a result, developers are looking to tap the growing demand in every urbanising city in China for lower priced homes.

CapitaLand currently has in the pipeline about 20,000 units in China. Its bid to build affordable homes is still in the planning stage, said Mr Liew.

'We have been building quite a fair bit of usually mid-range or higher-end range (homes). But we think the demand for affordable housing will go up,' said Mr Liew, who gave a keynote address on China's urbanisation and its impact on the property market there.

'I think we are able to bring designs that are standardised, we think that we can control costs in a more disciplined way, and we have got to try to discuss with local officials to get land... at a lower price, more affordable land.'

He said CapitaLand will be looking to build in 'any city that has demand'.

'If you look at the urbanisation... they will probably need 10 million to 15 million homes a year. That is a big number.'

Mr Liew also said that while there may be short-term uncertainty in China's property market, he believes that the market is sustainable in the long run.

Strong economic growth, rapid rural to urban migration, and high speed railway developments connecting more parts of China in shorter times will create more demand for homes.

'People ask, where is your best market outside Singapore? I can't think of any other market that is stronger than China. We will be a long-term player there.'

He acknowledged concerns over a property bubble there but said that, because of the country's size, different cities face different-sized property bubbles.

'You must segregate different cities and then you must segregate the high end from the normal end, which is not so bad because the affordability is still there. The bubble is not forming in that sense.'

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said going into affordable housing in China is a timely move for property developers given the cooling measures, though Singapore developers are likely to face many challenges.

'It's a numbers game as the developer has to sell a lot more and also has to compete with local players who are experienced. If they go into the second- and third-tier cities, they will be coming up against more local players.'

The two-day AICE started yesterday. Organised by the Securities Investors Association (Singapore), it allows listed companies and financial institutions to educate investors on current market trends.