CapitaLand, Southeast Asia’s biggest developer, said on Feb 14 it plans to double its real estate investment trust (REIT) portfolio to 10 by 2010, as it looks for new opportunities in China, India and Malaysia.
The group, which reported a record profit for last year, owns five REITS, including retail-based CapitaMall Trust and office-based CapitaCommercial Trust, with exposure to countries such as Singapore, China and Malaysia.
Chief executive Liew Mun Leong said that the group plans to cash in on Asia’s booming property market, as he estimates the region could provide some US$400 billion (RM1.4 trillion) of REITs.
“We have been sought after by various parties for REITs,” Liew said at a results briefing. “For us to do four or five more would not be difficult.”
Asked which countries the group was looking at, Liew said: “China is a big potential. Japan, yes, but it’s a difficult market.”
“India, if you want to let loose, you can create a lot of REITs. Malaysia still has potential.”
CapitaLand, in which state investor Temasek Holdings has a 46% stake, generates about 80% of its earnings outside of Singapore.
The firm said on Feb 13 that it would pay S$41 million (RM93.32 million) for a 13% stake in Japanese property trust BLife Investment Corp, making it the biggest shareholder.
CapitaLand posted a near five-fold surge in fourth-quarter net profit on Feb 14, beating expectations and helped by bumper home sales in Singapore and a write-back from asset revaluations.
The results spurred the stock more than 4% to a new high of S$7.55. It later eased to S$7.45, up 2.8%.
The group posted record profit in the full year of S$1.02 billion, up 35.6% from 2005.
The developer said fourth-quarter net profit surged 389% to S$455.82 million, from S$93.18 million in the same period the previous year. The result beat the S$101.9 million fourth-quarter profit forecast by Reuters Estimates.
CapitaLand said assets under management are expected to reach S$18 billion by the end of 2007, up from S$14.3 billion in 2006.
The developer reaped a gain of S$163.8 million from the divestment of its Chinese shopping malls into another REIT, CapitaRetail China Trust. That was listed in December with a portfolio of seven malls valued at S$690 million.
Strong demand for luxury homes and office space in Singapore helped boost earnings. Private home prices in Singapore rose 10.2% in 2006, the strongest growth in seven years.
But Liew said that the city-state’s property market was not overheated.
“It’s not overdone compared to other prices in similar geographies,” Liew said, adding that apartments in Hong Kong and London were commanding higher prices per square foot.
In Singapore, Liew said the demand for homes has been driven by “super-rich billionaires, who can park US$10 billion without consideration of return of any kind.”
CapitaLand said it remained upbeat on China, where it plans to build 35,000 homes in various cities together with its partners across the country.
CapitaLand, and other property firms active in China, are facing higher tax costs after Beijing began enforcing a land appreciation tax in a bid to curb property speculation.
CapitaLand’s serviced-apartment division, Ascott Group, earned a record S$151 million net profit last year.
The group announced a total dividend of 12 Singapore cents for 2006, against 18 Singapore cents in the previous year.
CapitaLand shares have surged 75% in the last year, outperforming rival City Developments Ltd shares, which rose 59%. Both stocks lagged rival Keppel Land, which nearly doubled in price.