Metro grows in China as property play

Q4 net profit rises 34% to $25.6m, helped by fair-value gains

THE property development and investment division of Metro Holdings, which is better known here as a retailer, is providing a bigger share of its earnings as retail revenue dips.

For the financial year ended March 31, Metro Holdings reported revenue of $224.4 million, up 4.8 per cent from the preceding year.

On a business segment basis, its property arm accounted for $49.2 million, up from $35.9 million previously.

For FY 2008, the property division contributed $75.6 million or 87.4 per cent to group pre-tax profit, up from 84 per cent previously. But revenue from retail business eased to $176.4 million, from $179.5 million.

Net profit for the year was $65.97 million, a 3.95 per cent drop. Earnings per share dipped to 10.46 cents from 10.89.

Net earnings were up 34.4 per cent at $25.6 million for the fourth quarter, helped by $14.9 million in fair-value gains from investment properties, while revenue was down 2.69 per cent at $53.2 million.

Metro Holdings, which has office and retail properties in China, said that for the quarter, its property division revenue was $17.2 million, up from $8.9 million in the previous corresponding quarter, due to initial income from Metro City Beijing, higher income from Metro City Shanghai and a one-time recognition of service charges of $4 million.

But Metro is not neglecting its retail business. It confirmed an earlier BT report that it will open a new outlet at City Square Mall near Little India. It will also open a new retail outlet in Jakarta’s Grandaria City.

Metro Holdings occupies more than 821,000 square feet of retail space here, but its group general manager Jopi Ong said that the costs of doing retail business in Singapore is prohibitive.

‘The prices here are definitely too high.’ he said. ‘To operate a department store, you need a lot of real estate.’

Metro Holdings chairman Winston Choo, who joined the company in July 2007, added: ‘In terms of property development and investment, we have no plans for Singapore because I think the opportunities are better in China.’

And Metro’s Chinese property portfolio is set to grow as it increasingly becomes a China play.

It now has 200,000 square metres of net lettable area in China, including Metro Tower Shanghai and GIE Tower Guangzhou.

Also in China, it has 127,500 properties under development including 1 Financial Street, Metropolis Tower and EC Mall, all in Beijing.

Occupancy rates in Metro City Shanghai and Beijing, in which Metro Holdings holds 60 and 50 per cent stakes, were 99.4 and 81.1 per cent respectively.

At Metro Tower Shanghai and GIE Tower Guangzhou, in which it holds 60 and 100 per cent stakes, occupancy was 97.9 and 68.1 per cent respectively.

Metro Holdings said that the lower occupancy at GIE Tower was due to not being able to provide existing tenant KPMG with the extra floor space that it required in the building.

A final dividend of one cent per ordinary share has been proposed.

Metro Holding’s share price closed half a cent down at 78 cents yesterday.

Source : Business Times – 29 May 2008

$9.7b price tag for landmark Tianjin eco-city

THE ambitious eco-city being jointly built by Singapore and China in this northern port city will cost about 50 billion yuan (S$9.7 billion), officials here said yesterday, while giving the assurance that the project will not benefit only the rich.

This is the first time an official price tag has been disclosed for the landmark project, the biggest bilateral venture between Singapore and China since the Suzhou Industrial Park in the early 1990s.

Unconfirmed reports in the Chinese media had previously estimated the cost of the eco-city at 30 billion yuan.

Mr Lin Xuefeng, vice-chairman of the Sino- Singapore Tianjin Eco-city Administrative Committee, told a press conference here the project would cost about 50 billion yuan to build.

He added, however, that this preliminary estimate could vary, depending on the projected cost tabled by the Sino-Singapore joint venture company building it.

Environmental awareness is growing in China, especially among the property-owning middle class. But the poor and those living in less developed regions continue to struggle with the fallout from all-out economic growth, such as polluted air and poisoned rivers.

Asked if this flagship project will benefit only those who can afford to live there, Mr Lin said planners will draw on the experience of Singapore’s Housing Board to ensure that residents from a wide spectrum of society are housed in the eco-city.

‘Social harmony is first and foremost a housing issue,’ he added. ‘We hope to create a harmonious city that is suitable for different sectors of society.”

According to a draft master plan released yesterday, at least 20 per cent of homes in the eco- city will be public and subsidised. The 2,000 villagers who have to relocate for the project will also be guaranteed jobs and housing in the new city.

The overall population of the city will be kept at around 350,000, though there are no plans to restrict the number of cars, said Dr Dong Ke, a senior urban planner with the China Academy of Urban Planning and Design.

Instead, planners hope to reduce residents’ reliance on cars by setting up an efficient public transport network and by designing walkways linking homes, shops and public spaces.

Another highlight of the plan is the proposed building of a new university focused on environmental technology.

Mr Lin said the university would be vital in providing the technical expertise and manpower required for the eco-city, though it has yet to get the official green light from Beijing.

Showcase

THE eco-city project involves building from scratch a 30-sq-km city in Tianjin that will showcase a good balance between rapid economic growth and environmental protection.

It is hoped the project will be fully completed in about 10 to 15 years.

Plans for the eco-city will draw heavily on the urban planning experience of HDB new towns in Singapore, while incorporating much of the latest technology and expertise on energy and water conservation.

Source : Straits Times – 7 May 2008

Yanlord acquires site for residential devt in Shanghai

REAL estate developer Yanlord Land Group is extending its presence in Shanghai through the purchase of a residential development site for 600.4 million yuan (S$118.7 million).

Yanlord subsidiary Shanghai Renjie Hebin Garden Property Co acquired the 117,459 square metre site in Qingpu District in a government auction last month.

Commenting on the acquisition, Yanlord chairman and chief executive officer Zhong Sheng Jian said: ‘Shanghai remains a key focus in our expansion strategy.’

He said the acquisition, together with the acquisition last November of the New Jiangwan Urban Area site in Shanghai Yangpu District, shows the company’s continued confidence in the potential of the Shanghai real estate sector.

‘This latest acquisition not only replenishes our land bank in Shanghai, in which we have been the early entrants since 1993. More importantly, this newly acquired site also allows us to further establish our foothold in the rapidly emerging Qingpu District where our Shanghai Yunjie Riverside Garden Phases 1 and 2 are located,’ he added.

The site has a view of Yangli Jing River, Dingpu River and Daying Harbour. With a plot ratio of 1.0, the site cost 5,112 yuan per sq metre of gross floor area. Yanlord plans to develop the site into a high-end residential development comprising low-rise and townhouse apartment units.

Yanlord Land is based in China and focuses on developing high-end integrated residential projects and integrated property development projects in high-growth cities in China.

Yanlord entered the China market about 15 years ago and developed a number of large-scale residential property developments with international communities of residents, such as Yanlord Gardens, Yanlord Riverside Gardens, Plum Mansions and Orchid Mansions.

Source : Business Times – 4 Jan 2008

Allgreen takes on 7 China developments

ALLGREEN Properties of Singapore is set to move into China in a big way with seven commercial and residential developments together with Hong Kong publicly listed companies Kerry Holdings and Kerry Properties. All the companies are controlled by Malaysian tycoon Robert Kuok.

The projects, which have a total investment amount of 29.3 billion yuan (S$5.73 billion), will be in the cities of Hangzhou, Chengdu, Qinhuangdao and Shenyang.

In a statement released yesterday, Allgreen said that this was in line with the group’s strategy to expand regionally, especially in China, which it views as a ‘long-term growth market’ providing ‘growth and recurrent income’.

Allgreen said: ‘In addition, the group will also be able to better allocate assets to ride out any downturn in the Singapore economy.’

The projects will mostly be residential but hotel, offices and commercial properties can also be expected. These projects also represents the group’s fourth investment in China.

Allgreen appointed Savills while Kerry Properties appointed DTZ Debenham Tie Leung to carry out valuations of the sites and the agreed property value was about 8.64 billion yuan.

Based on the agreed property value, the outstanding land cost and the non-property net asset value of the joint venture companies, the aggregate consideration payable by Allgreen for its acquisition of the equity interests in the joint venture is estimated to be about 967 million yuan.

Allgreen said that the group will fund the project by internal funds and/or external borrowings.

The statement also noted that the group’s aggregate maximum total investment amount in the joint venture is 6.98 billion yuan, representing about 96.2 per cent of its latest net tangible assets as at Dec 31, 2006.

No development time frame was given for the projects.

There is a mixed-use development planned, comprising hotel, offices, retail podiums and apartments on a 67,374 sq m site near West Lake in Hangzhou with a total investment amount of 5.34 billion yuan and Allgreen will hold a 10 per cent stake.

Also in Hangzhou will be a residential development on a 104,521 sq m site at Xiacheng District with a total investment amount of 1.83 billion yuan, of which Allgreen will hold a 35 per cent stake.

Another residential development is slated for Chengdu’s Hi-Tech Industrial Development Zone. To be built on a 46,130 sq m site, it will have a total investment amount of 1.38 billion yuan, of which Allgreen will have a 25 per cent stake.

Allgreen will also hold a 25 per cent stake in a second residential development on a 38,617 sq m site in Chengdu’s Hi-Tech Industrial Development Zone with a total investment amount of 1.16 billion yuan.

In Qinhuangdao, Allgreen will hold a 10 per cent stake in a mainly residential development on a 113,393 sq m site in the West Section of Hebei Street, Haigang District with an investment amount of 2.2 billion yuan.

Also in Qinhuangdao is another residential development on a 92,250 sq m site at the West Section of Hebei Street, Haigang District with an investment amount of 1.35 billion yuan, of which Allgreen will have a 10 per cent stake.

A mixed-use development has been planned for the 172,694 sq m site on the East Side of Qingnian Street, Shenhe District in Shenyang with a total investment amount of 16 billion yuan. Allgreen will take a 30 per cent stake in this project.

Source : Business Times – 7 Dec 2007

Keppel Land to develop big housing project in Shanghai

KEPPEL Land is embarking on a large-scale residential project in Shanghai.

The Singapore-based developer announced yesterday that it has, through two subsidiaries, acquired full ownership of Shanghai Hongda Property Development for about $13.6 million.Shanghai Hongda owns a 26.4-hectare residential site in Xinchang Town, in Nanhui District in south-eastern Shanghai.

With the acquisition, Keppel Land said it is ‘poised to capitalise on the urban expansion and growing real estate market of Shanghai’.

Keppel Land already has three residential developments in Shanghai.

‘Shanghai is positioned as a global financial hub,’ said Ang Wee Gee, Keppel Land’s director of regional investments. ‘Its property market is poised for continuing good prospects.’

Nanhui District has in recent years received significant attention from the government, owing to its strategic location adjacent to China’s largest port facility, the Yangshan Deep Water Port off Hangzhou Bay.

The Shanghai government has pumped money into infrastructure and real estate development in the district. It also has plans to develop the south-eastern tip of Nanhui District into a harbour city to support the activities of Yangshan Port and trade-related industries and services, said Keppel Land. The harbour city will house 800,000 people and several industrial parks by 2020.

‘Earmarked as one of key housing zones in Shanghai, Nanhui District has taken off rapidly with a surge of public and private real estate investments,’ Mr Ang said.

‘Our latest project is well-timed to capture Nanhui’s growing housing demand, which is expected to be underpinned by strong owner-occupiers’ demand over the next few years.’

According to Keppel Land, more residents are expected to be drawn into Nanhui District by increasing economic activities and opportunities pouring into the area.

The project in Nanhui District is aimed at middle-income buyers. Keppel plans to build it in phases over five years into a mixed residential enclave of 3,000 homes ranging from terrace houses to low and mid-rise apartment blocks. The development will include a club house and retail shops.

‘Keppel Land has been present in Shanghai for more than a decade, during which we have established ourselves as a quality developer with keen market knowledge and strong business networks,’ Mr Ang said.

‘We are confident that with our valuable experience and expertise, Keppel Land is well-placed to identify and tap new opportunities, and to meet the demand for quality homes in this market.’

Keppel Land said the latest acquisition is not expected to have any significant impact on its net tangible asset and earnings per share for the financial year ending Dec 31, 2007.

Source : Business Times – 16 Nov 2007

China firms acquire Bukit Batok properties for $300m

A GROUP of Chinese investors has collectively spent $300 million to buy commercial properties along Bukit Batok Crescent to house their businesses.

These companies – with interests in health care, education, technology and other businesses – plan to use Singapore as a launch pad for their regional expansion plans.

They bought part of the new 61-storey WCEGA Tower, as well as a neighbouring 500-unit commercial building, to hold their offices.

Another 29 top mainland companies will set up a giant showcase for their signature cooked fare and China-made food products at nearby WCEGA Plaza.

All these Chinese companies are members of four major trade organisations that represent health care, technology and other business interests, as well as enterprises from Guangdong province.

More than 30 executives of these firms attended yesterday’s official launch of WCEGA Plaza and WCEGA Tower along Bukit Batok Crescent.

The guests of honour at the event included Mr Xue Yun Gang, a representative of the Chinese embassy; Mr Chen Bo Jian, a representative of China’s World Trade Organisation delegation; and, Mr Wang Zhao Lin, chairman of the Guangdong Association of Enterprises.

‘Many Chinese companies appreciate the advantages of using Singapore as a platform to expand worldwide and to raise public funds from initial public offerings here,’ said Mr Chen.

Local developer Sin Soon Lee Group is currently building the WCEGA Tower and WCEGA Plaza, as well as the neighbouring 500-unit building . Construction is expected to be finished by May 31, 2009.

The World Chinese Entrepreneurs General Association (WCEGA) is expected to be the co-manager of these properties. The entire second floor of the WCEGA Plaza will be devoted to 29 companies chosen from China’s 100 most famous restaurants, including the Xiao Fei Yang, or ‘Little Fat Sheep’, which sells Tianjin province’s famous ‘Gou Bu Li’ meat dumplings.

Source : Straits Times – 15 Nov 2007

Yanlord projects draw strong response

YANLORD Land Group, China’s high-end real estate developer, yesterday said it has pre-sold nearly one billion yuan (S$197 million) worth of properties in the month of September for three of its projects.

The company, which was included in the PrimePartners China Index (PPCI) yesterday , said it released and pre-sold a total of 31 duplex apartment units for the second phase of Yanlord Riverside City in Shanghai last Friday. All the units, representing a total gross floor area (GFA) of 15,113 sq m, were taken up on the day of the launch.

This grossed Yanlord 527.8 million yuan in pre-sale proceeds. The average selling price for this project surged 44 per cent to 34,924 yuan per sq m from 24,289 yuan per sq m achieved in July 2007.

Also on the same day, Yanlord released a total of 150 apartment units of Bamboo Gardens (Phase three) in Nanjing. Of that, 104 apartment units were sold on the day of the launch. That’s a take-up rate of 69 per cent. Total GFA of 13,474 sq m was pre-sold, grossing an aggregate of 144.5 million yuan in pre-sales proceeds.

The average selling price for this development increased 26 per cent to 10,726 yuan per sq m from 8,500 yuan per sq m in May 2007.

The third project is in the southern city of Zhuhai. Yanlord said it released a total of 228 apartment units under the first phase of Yanlord New City Garden on Sept 16. Of that number, 180 apartment units were sold on the first day. The take-up rate was 79 per cent. Total GFA of 27,984 sq m was pre-sold, grossing an aggregate of 257.4 million yuan in pre-sale proceeds.

The average selling price for this development rose 15 per cent to 9,200 yuan per sq m, from 8,000 yuan per sq m achieved in May 2007.

Yanlord said the strong response to its projects reflects the robust underlying demand for quality accommodation. This is underscored by the strong economic performance, rising affluence of its population and the increasing urbanisation in mainland China.

Yanlord is one of investors’ favourite China stocks listed on the Singapore Exchange. Since news about its inclusion in the PPCI late last week, and in anticipation of the liquidity inflows from China following the set-up of new Qualified Domestic Institutional Investor funds, its share price has been chased up by 23 per cent to $4.22 yesterday.

Source : Business Times – 2 Oct 2007

CapitaLand buys Shanghai site

CAPITALAND has stepped up its presence in Shanghai by securing a commercial site in the Zhabei District for 598.1 million yuan (S$119.6 million).

The purchase was made in a government land auction through an indirect subsidiary, Yorksure Pte Ltd.

The 20,310 sq m site, with a plot ratio of 3.5, will be developed into quality offices and a high-end hotel or service residences. Total gross floor area is estimated at 71,085 sq m.

CapitaLand said in a statement yesterday that the leasehold site, located along West Guangzhong Road in the commercial area of Ling Shi, is in the Shanghai Multimedia Valley.

The Shanghai Multimedia Valley, with a planned total gross floor area of 800,000 sq m, will house a concentrated cluster of high-tech and multimedia-related industries.

The mega project is slated for completion in 2015.

The property group’s proposed Zhabei District development, which has a tenure of 40 years for the hotel and 50 years for the offices, will be ready by end-2009 to benefit from the maturing business environment in the area.

Lim Ming Yan, CEO of CapitaLand China, said: ‘This acquisition will enhance our presence in Shanghai and extend the group’s footprint into Zhabei District.

‘With its comprehensive transport infrastructure, excellent connectivity and maturing business environment, Zhabei District is becoming one of the major extensions of the city’s central business district.

‘We will build quality offices and high-end business accommodation to cater to the needs of those working in the Shanghai Multimedia Valley.’

Source : Straits Times – 24 Aug 2007

MMP Reit takes full control of mall in Chengdu

INSTEAD of acquiring a 50 per cent stake, Macquarie MEAG Prime Real Estate Investment Trust (MMP Reit) is now taking full control of Renhe Spring Department Store in Chengdu, China, for 350 million yuan (S$70.3 million).

MMP Reit had in April this year announced that it would acquire a half stake in the 101,000 sq ft department store owned by Renhe Spring Group for 150 million yuan. The property, valued at 340 million yuan as at Dec 31, 2006, was re-valued at 350 million yuan as at July 31 this year.

On the increased stake, Franklin Heng, chief executive officer of the Reit’s manager, Macquarie Pacific Star, said: ‘This is a win-win arrangement…Not only will the yield accretion of this transaction for MMP Reit now be higher, Renhe Spring Group will also have more financial resources for its expansion and development projects in China, over which MMP Reit will continue to enjoy a first right of refusal.’

Renhe Spring Group’s pipeline of opportunities in China includes two other prime retail properties in Chengdu with combined gross floor area of more than one million sq ft.

The 100 per cent stake in the department store represents a yield accretion of 3.4 per cent on an annualised basis to MMP Reit’s distribution per unit, assuming full debt financing.

Between 2005 and 2006, Renhe Spring Department Store registered about 23 per cent of year-on-year retail sales growth and, for 2006, its sales were 263 million yuan.

The 350 million yuan price tag comprises 310 million yuan in cash and the assumption of an interest-free debt of 40 million yuan owed to Renhe Spring Group and repayable over seven years. Renhe Spring Group will also continue to operate the department store for a fee of 0.8 per cent of the gross turnover.

Renhe Spring Group guarantees annual net distributable profits of 26.4 million yuan, which is secured for two years by the sum of 20 million yuan to be deducted from the consideration and held in escrow.

With the completion of MMP Reit’s acquisitions in Japan in May and assuming the acquisition in China is fully funded by debt, MMP Reit’s gearing will be 31.8 per cent.

MMP Reit comprises eight properties including a 74.23 per cent stake in Wisma Atria, a 27.23 per cent stake in Ngee Ann City, and six properties in Tokyo.

Source : Business Times – 23 Aug 2007

CapitaLand tie-up to develop China malls

CapitaLand has signed a cooperative agreement with China Vanke, China’s largest residential developer, in a move that will increase the Singapore property giant’s potential pipeline of retail mall assets in the country.

Under the agreement, CapitaLand and Vanke will jointly develop identified retail assets – for ongoing projects and upcoming ones – in Vanke’s residential townships. These retail assets will then be acquired by CapitaLand ‘at the appropriate time’, the company said.

CapitaLand and Vanke will also employ the same partnership arrangement for potential greenfield residential township projects, which Vanke intends to continue building in China.

The retail assets could eventually be injected into CapitaLand’s CapitaRetail China Trust (CRCT), which is made up of some of CapitaLand’s retail assets in China. ‘There is a possibility of them (the new retail assets developed jointly with Vanke) being ultimately injected into CRCT, but this will only be in the medium to long term,’ said a CapitaLand spokesperson.

CapitaLand now has over 70 malls in its China portfolio, and this agreement is expected to add to the number.

‘The partnership with Vanke is not only mutually beneficial but also a strong endorsement from China’s largest developer of our retail property development and management skill sets, and on-ground delivery capabilities in China,’ said Liew Mun Leong, chief executive of CapitaLand.

‘In addition, by having our retail property presence in these townships, residents in Vanke’s properties will enjoy even higher quality of living and there will be greater appeal for such developments among the local population.’

The joint venture is expected to raise the standards of residential township projects in China to be on a par with international township developments – where residential and retail components are well laid-out to allow residents to enjoy F&B and retail facilities within easy reach, said CapitaLand.

CapitaLand’s shares closed 20 cents down at $7.80 yesterday.

Source: The Business Times, 11 July 2007