New Year Message for 2012

President and CEO of CapitaLand, Mr Liew Mun Leong shares his upbeat outlook for the company in 2012

Issue: Jan 2012

Mr Liew, who has successfully steered CapitaLand through many perfect storms, is upbeat despite the challenging business climate ahead
Mr Liew, who has successfully steered CapitaLand through many perfect storms, is upbeat despite the challenging business climate ahead

Plagued by uncertainties and economic turmoil looming in the West, the year ahead will be challenging. But Mr Liew Mun Leong, President and CEO of CapitaLand, is confident that CapitaLand can navigate through the impending turbulence.

"We went through the Asian crisis in 1997, 2001 and the global financial crisis in 2008. This is the fourth crisis we are going through. As long as I have good people, I am not worried about crises. Having good people is the best preparation to face any crisis. Make sure we have good people, keep them motivated, keep calm, build people," said Mr Liew.

Riding on Strong Fundamentals

While the business environment may be challenging, Mr Liew intends to stick to the Group’s strong business fundamentals to steer the company through turbulence. Mr Liew says that the Group will continue to focus its resources in its key sectors - homes, shopping malls, offices, integrated developments and serviced residences. He adds that the Group will also remain focused on its 3+3+2 market-asset strategy. “Our asset allocation will be formulated along the geographical spread of 3+3+2. The main three geographies are Singapore, China and Australia (these three take up 90% of our assets). The next three [countries are] Malaysia, Vietnam and Europe (for serviced residences only). The final two countries are India and Japan,” he explained. Mr Liew adds that this strategy will give the Group a balance in its market exposures.

"We believe in the demand fundamentals in these markets and we are ‘long' in our investment strategy there. In real estate, we cannot take a short-term view and jump in and out of the market," he points out.

In addition, the Group must exercise, as it has done in the last 11 years, strict financial discipline in its investment approach. "We will be aggressive but disciplined in our investment approach with due consideration to our risk management analysis," said a determined Mr Liew.

Creating Quality and Attractive Products

Whether it is an upturn or a downturn in the economy, CapitaLand has also remained true to its core, and that is to produce quality products – exquisite design in strategic locations. That, combined with its trusted brand name, has been behind its ability to draw investors and customers.

As Mr Liew explained in his recent Sunday email to CapitaLand employees in December, "If you are a pretty girl, there will always be a long queue for you."

Bedok Residences' popularity with buyers is another example of CapitaLand's commitment in providing quality products to its customers
Bedok Residences' popularity with buyers is another example of CapitaLand's commitment in providing quality products to its customers

He was referring to Bedok Residences, CapitaLand’s November launch of its residential development, which was part of the Group’s latest integrated development in the east of Singapore. People queued for two days to buy an apartment that will sit atop a two-storey shopping mall and a transportation hub in the heart of Bedok. By the end of the first day, 350 of the 450 units released were sold. By 5 December 2011, 493 (85 per cent) of the 583 units in the eight, 15-storey tall development were sold.

"On the first day of the launch we sold 66 units within the first one hour, i.e. one [unit] in less than one minute," added Mr Liew.

To Mr Liew, Bedok Residences' appeal is clear. Being the only private condominium in the Bedok Central area, Bedok Residences is the preferred buy for HDB-upgraders who are currently staying in the estate and wish to remain there, especially for young families who want to stay close to their parents. Its excellent connectivity to the Bedok Transportation Hub, which consists of a new business interchange and MRT station, brings residents to many parts of Singapore. Great convenience also arises from close proximity to Bedok Town Centre, including amenities such as the famous Bedok hawker centre. The project is also integrated with a brand new 350,000 square metre shopping mall with car park lots which the residents may use at night when it is not utilised by shoppers.

"This clearly shows that Bedok Residence was successful on its own merits – a very ‘pretty girl', and hence the queue!" explained Mr Liew.

Mr Liew remains upbeat about China’s prospects and is going ahead with the Group’s plans to increase its China assets (Pictured here, Raffles City Beijing)
Mr Liew remains upbeat about China’s prospects and is going ahead with the Group’s plans to increase its China assets (Pictured here, Raffles City Beijing)

Bullish about China

Focusing on China has been one of CapitaLand's major business strategies. Despite the slowdown in the economy, Mr Liew remains upbeat about China's prospects and market growth as CapitaLand has been a long-term player in China since its entry 16 years ago. In an exclusive interview he gave to The Straits Times in October 2011, Mr Liew underscored his confidence and pointed out that China is the world's strongest market, has the fastest economic growth, the biggest population and that the real estate market there is still very infantile.

Mr Liew has been emphatic and unapologetic about his drive to expand in China. He has made known his plans to double the number of shopping malls in China from 56 to 100 in the next three to five years to ride on the country's burgeoning consumption needs, as well as CapitaLand's aim to increase its China assets to 45 per cent of the company's total assets.

There are plans to launch 4,000 residential units annually with a pipeline of over 22,000 units over the next four to five years, and an additional five Raffles City developments by 2015. Ascott, CapitaLand's serviced residences arm, is on target to double its portfolio in China to 12,000 apartment units by 2015. CapitaValue Homes, which has a pipeline of 2,600 units, is on target to develop about 10,000 value homes annually also by 2015. All these reflect CapitaLand's great optimism in the China market, supported by a strong balance sheet.

"There is no market better than China [at the moment]. China poses the biggest, strongest real estate market for us. We have a balanced approach. We have residential, malls, serviced apartments and offices. We are there for the long term. We should not be shaken by short-term volatility," Mr Liew explained.

Hence he is not perturbed by the series of property measures the China government has introduced. In fact Mr Liew said in the exclusive interview with The Straits Times, "I would be worried if they didn't have any measures. Why? Because we are long-term players, not speculators and we don't like the bubble to burst."

In keeping with the balanced approach to CapitaLand's China business, Mr Liew has been careful to maintain that CapitaLand would never become a wholly China-focused operation and that assets in any overseas venture should never exceed 50 per cent of the company's total.

Funding for the Future

Mr Liew quipped in an interview with The Straits Times that the Group has been so successful in tapping the capital markets for funds that people have become confused and remarked that CapitaLand was operating like a bank. Even analysts perceive the Group as a fund manager when they look at the S$32 billion worth of funds it manages, forgetting that CapitaLand is a real estate company to begin with.

This is because while CapitaLand is a developer, it is also successful in managing a portfolio of six Real Estate Investment Trusts (REITs) and 16 private equity funds which totals up to S$32 billion. The Group taps the capital markets for funds through listed real estate investment trusts (REITS) to fund its various projects. As a result, it relies only on bank borrowings for 45 per cent of its capital.

CapitaLand's headquarters in Singapore, Capital Tower
CapitaLand's headquarters in Singapore, Capital Tower
Photo credit: Yeo Siak Wee, Singapore

Building to Last

Mr Liew wakes up every morning at six to pound the treadmills for 45 minutes, covering five to six kilometres before rounding it off with 10 minutes of casual qigong breathing exercises. "We must have healthy troops and healthy leaders to compete in this highly competitive world. It is even more crucial during the current global crisis that we have healthy bodies and minds to ride through the turbulence and uncertainties," he added.

So, Mr Liew, who counts a pair of jogging shoes as his must-have in his travelling bag, urges his staff, "Your health is your personal responsibility. Nobody but you are responsible for your health.
If you love life, you should look after your body first and only you can do it."

This is especially important to Mr Liew who believes that the key to a lasting company depends on his talent pipeline. And he would like his successor to be someone from within CapitaLand. To this end, Mr Liew is continuing to build his people so that they can rise to the occasion when the time arrives.

And with all these plans marking the signposts of CapitaLand's onward journey, it is no wonder Mr Liew remains upbeat about his aspiration for the company to "last for 30 generations".

User CapitaLand
202.79.215.X | 2012-01-03 19:21:23
Dear Mark

Thank you for your feedback.

Since CapitaLand was formed in Nov 2000, its market capitalisation has expanded from about S$2 billion to about $10 billion currently. Excluding the S$1.8 billion that was raised from shareholders, this means that CapitaLand would have created value for shareholders to the tune of about S$6 billion. In addition, CapitaLand has provided ongoing dividends of about S$2.5 billion to date. CapitaLand will continue to rely on our corporate strategy of focus, balance and scale when reviewing investment opportunities.
User Mark Poh
69.61.147.X | 2012-01-03 10:48:40
While Mr. Liew has so far been able to keep Capitaland profitable on paper, he has not been able to create and retain shareholder's wealth. The extensive borrowings that Capitaland has embarked on has greatly diluted the market value of the stock.
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