Chinese state firm sinks roots in S'pore, plans to take on the world
MCC Land uses Bukit Batok base to tap the region
By EMILYN YAP
(SINGAPORE) A Chinese state-owned enterprise is quietly growing its global footprint out of a nondescript industrial building in the leafy suburbs of Bukit Batok.
The 19th floor has been taken up by China Metallurgical Group Corporation (MCC), which has businesses stretching across natural resource exploration, equipment fabrication, engineering, construction and property development around the world.
MCC has been in Singapore for almost 20 years, registering its construction unit China Jingye Engineering Corporation as early as 1996. But it was only with the recent incorporation of its property development unit MCC Land that the market sat up and took notice.
MCC Land is eyeing expansion - literally. Managing director Tan Zhiyong has hanging in his office a large map of Singapore dotted with stickers: two pink ones for the land parcels it has bagged, and more than 20 green ones for other plots that the government has to offer.
'We will pursue long- term development in Singapore,' says Mr Tan in Mandarin in an interview with The Business Times. 'We are not here to offer just one or two projects. We plan to offer long-term real estate services just like a local developer.'
In time to come, MCC Land may even go regional, partnering other developers to enter countries such as Malaysia and Indonesia.
Registered only in February, MCC Land stirred up the property market in March when it pipped big boys such as Far East Organization to win the state tender for an executive condominium site in Yishun. Its bid of $127.8 million or $281 per square foot per plot ratio (psf ppr) far exceeded analysts' expectations.
Just three months later, it took home another residential plot in Sembawang by offering $131.7 million or $387 psf ppr - a price that again surpassed market estimates.
There were rumblings among market watchers about the high bids but Mr Tan plays down these concerns. MCC Land made reasonable bids given that they were not too far off from the second and third-placed ones, he says.
Furthermore, China Jingye will be the contractor for both sites and construction costs will be lower, giving MCC Land a competitive edge, Mr Tan says. 'On the whole, we will not be charging high prices just because our bids were higher.'
MCC Land plans to launch The Canopy, an executive condominium project with about 400 units in Yishun in Q4. And in Sembawang, it could roll out a condominium with about 300 units in Q1 next year. Both projects will have lush landscaping and water features for a tropical resort feel.
Mr Tan acknowledges that consumers may not be familiar with MCC Land yet. 'We can't say we weren't worried. Some may know us as a contractor but we are quite new to the market as a developer,' he says.
To ensure that its projects will appeal to consumers here, the firm engaged local architects Surbana and SAA. It also sought feedback from local employees during the design process. 'I believe many people will like our products when they are launched,' Mr Tan says.
Some have wondered why MCC Land chose to enter the Singapore property market this year, amid fierce competition for sites and rising land prices. And there is a bigger question: why would a Chinese developer be interested in tiny Singapore when there are still so many business opportunities in vast China?
MCC has property projects in cities such as Beijing, Nanjing and Wuhan but it has to venture abroad, Mr Tan says. This is something that the Chinese government has been encouraging state-owned enterprises to do. 'To be an international corporation, we can't have operations only in China . . . To build our brand, we have to expand overseas,' he says.
MCC has gained a good understanding of the Singapore market, so becoming a developer here was the next logical step. 'We have handled so many construction projects and real estate is a major part of MCC's business. So it's quite a natural progression for us to go into property development,' Mr Tan says.
Singapore's property market is attractive because it carries lower risks, offers more stable returns, and provides opportunities for regional expansion, he adds. MCC Land has plans to use the experience it gains here to enter other markets such as Indonesia and Malaysia.
It also helps that Singapore's culture is not too different from China's, Mr Tan says. Perhaps as proof of how easy it is to live here, he has settled down with his wife and two children for the last 14 years.
MCC Land is taking competition with local developers in its stride. 'No company can monopolise a market. It's not good for consumers too,' Mr Tan says. 'Every market is the same - the Chinese come to Singapore, Singaporeans go to China. We are all competing in the same market.'
In fact, he believes more developers from the Chinese mainland could come for a slice of the property pie. There is evidence of this happening. Last year, China Sonangol Land bought 21 Angullia Park from OUE for $283 million. Qingdao Construction, which started taking on property development projects some years ago, also won the tender for a site in June.
'Singapore is a free market and there aren't many investment restrictions. Some private developers like Singapore and may even wish to immigrate here,' Mr Tan says. 'I think there will be more and more Chinese developers entering the Singapore market.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Mr Tan: We will pursue long-term development here. We aren't here to offer just one or two projects. We will offer long-term real estate services just like a local developer
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