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Singapore-based CapitaLand Limited, the largest listed real estate company in Southeast Asia, is to further consolidate its residential fund in China, the fastest growing market in the world.
CapitaLand China Holding Group CEO Lin Mingyan told China Daily that in addition to property development, including residential and commercial buildings, service residences and hotels, the company will further expand the business of CapitaLand China Residential Fund Ltd (CCRF).
CCRF, launched in October 2003 and engaged in investing in residential development projects in China, aims to capitalize on the growth of the residential property market with a primary focus on the mid to high-end segments in Shanghai and Beijing.
About US$12.7 million has so far been invested by CCRF into three residential projects, namely Oasis Riviera in Shanghai's Changning District, La Foret in Beijing's Chaoyang District and a townhouse site in Huacao Town in Shanghai's Minhang District.
CCRF secured additional commitments to the fund on April 16, increasing aggregate commitments to US$61 million. CapitaLand's commitment of US$20.501 million remains unchanged. Following the transaction, CapitaLand's effective interest in the preference share capital of CCRF was reduced to 33.6 percent.
To date, there are a total of 12 external investors in the fund, including corporations, financial institutions and individual investors.
"The project in northern Beijing's Asian Games Village, close to the designated Olympic Park area, is expected to be kicked off soon and CCRF and CapitaLand (China) Investment Co Ltd hold 80 and 20 percent stakes in the project respectively," Lin said.
CapitaLand acquired a piece of land, with combined area at 101,400 square metres, for 54.51 million yuan (US$6.57 million) from Beijing BNISG Group, the top developer of the Asian Games Village.
The company plans to build around 1,700 high-end residential apartments on the land.
"Based on our rich experiences in the real estate fund sector and the huge market potentials in China, our fund business is expected to be prosperous here," Lin said.
CapitaMall Trust and CapitaCommercial Trust, two wholly owned subsidiaries of CapitaLand, are successfully operating commercial and office property funds in Singapore.
Experts and insiders point out that China's property fund-raising channels are relatively limited, and it is time for CapitaLand to dip its toes into this sector.
"We initially planned to issue a US$100 million residential fund in China, but now, we are considering increasing it to US$200 million," Lin said.
Entering China in 1994, CapitaLand has pooled a total of 12 billion yuan (US$1.45 billion) in the nation, with the assets of CapitaLand China reaching 5 billion yuan (US$602 million) to date.
CapitaLand's business focus was in Shanghai during its first 10 years in China, but it will be largely shifted to Beijing from this year, according to Lin.
"Taking the 2008 Olympic Games and the real estate structure optimization in Beijing into account, we will accelerate our development in the capital city," Lin said.
The property conglomerate decided to invest 5 billion yuan (US$602 million) to 10 billion yuan (US$1.2 billion) in Beijing in the coming years.
(China Daily April 21, 2004)
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