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Daily Archives: 11 Nov 2009

Going to China with CapitaMalls

Posted on 11 Nov 2009 | Comments Off

VENTURING into China might seem a daunting prospect but the Scottish-themed Highlander bar and restaurant reckons it has a great way in – hitching a lift on the back of shopping centre giant CapitaMalls Asia.

The Clarke Quay outlet is one of several in Singapore being encouraged to use CapitaMalls’ expertise and huge presence in the Chinese market to leapfrog in.

The firm has 50 retail malls in 33 cities across China and has already proved a valuable vehicle for small and medium-sized enterprises (SMEs) to expand abroad while minimising the risks.

BreadTalk, watch retailer City Chain and M)phosis are just three of the 18 local companies that have taken up retail space in CapitaMalls centres and there are high hopes that more will be attracted.

CapitaMalls Asia has teamed up with Spring Singapore to organise its second trip to China, this time focusing on SMEs in the food and beverage business.

Spring’s deputy chief executive Ted Tan said the collaboration will allow SMEs to tap CapitaMalls’ network of contacts and its first-hand knowledge of trends in the China market.

‘We want to help eliminate as many variable risks as possible when entering a new market. It’s not always a rosy picture and there will be setbacks but at least you go in with your eyes open and with a shorter learning curve,’ said Mr Tan.

China’s food and beverage sector has enjoyed double-digit growth for the past 18 years and sales are tipped to hit 2 trillion yuan (S$406 billion) next year. It is an exciting industry in a huge market with untapped opportunities, added Mr Tan.

Many of the retailers The Straits Times spoke to have been tenants at CapitaMalls centres in Singapore.

Highlander managing director Clark Martin said he felt comfortable working with a mature and well-organised landlord.

‘We need someone to hold our hand and open the doors. The Chinese market is massive…it’s a little bit more challenging and there is no cookie-cutter approach so we need to get our concept right before going in,’ he said.

He is looking into expanding to Shanghai and Chengdu.

Highlander – a bar which offers over 250 different types of whisky – is a concept that has not yet been fully explored in the Chinese market. Tapas restaurants are also few and far between so that may mean opportunities for his other restaurant, The Tapas Tree.

Mr Tony Tan, managing director of China One, a bar at Clarke Quay, has similar expansion plans for Chengdu. He said Chengdu’s high disposable income and relaxed lifestyle meant an increased propensity to spend on entertainment and leisure.

M)phosis, a womenswear retailer, opened its flagship store in Beijing in April and now has five outlets.

Managing director Hensley Teh said that partnering a local retail player meant he did not have to compete with other international and more renowned brands for retail space.

‘Singapore brands are usually not at the top when a mall is looking for tenants but CapitaMalls gave us a platform to showcase our designs and raise the awareness of our brand,’ he said.

However, China’s sheer size and numbers mean there is no single winning market or strategy.

CapitaMalls Asia deputy chief executive Simon Ho said it was important to realise that China was not a homogenous market and that firms need to focus their resources on a single segment.

‘It’s a very competitive market and that’s where we urge our retailers to exercise caution… (Companies) need to conduct adequate market research and link up with the right partners.’

Source : Straits Times – 10 Nov 2009

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Posted in Overseas Property

Tagged CapitaMalls Asia, China Property, China Retail Space

Singapore Property : More action may be needed if recent property measures inadequate: MAS

Posted on 11 Nov 2009 | Comments Off

Risk of speculation escalating as market expects low interest rates to persist

Further action to cool the Singapore property market may be needed if recent measures to dampen speculation prove insufficient, the Monetary Authority of Singapore said yesterday.

MAS Financial Stability Review November 2009

Looking ahead, ‘price levels and transaction activity bear close monitoring’, MAS said in its yearly Financial Stability Review, published yesterday.

‘As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted.’

Despite lingering uncertainties in the economic outlook for Singapore and the rest of the world, ‘the domestic property market activity has taken on its own dynamic’, MAS said in a special section in the report highlighting what it sees as the key risks to Singapore’s financial system.

Other downside risks centre on the sustainability of the global economic recovery after governments start to withdraw their fiscal stimulus and tighten monetary policy, MAS said.

‘Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves,’ it said elsewhere in the report, commenting on the recent sharp rise in private home prices.

‘While the market rebound may appear to be aligned with improved prospects for the domestic economy, the current low interest rate environment has also played a part by reducing the cost of property financing,’ MAS said.

‘If unchecked, this could lead to a rising spiral of demand and prices as more and more property buyers and speculators are drawn into the market, and expose the property market to the continuing risks in the global economy.’

The steep increase in property prices here in recent months has already prompted the government to act to discourage speculation.

In September, the government banned interest-only housing loans and the interest absorption scheme that allows developers to absorb interest payments for apartments that are still being built.

It also restarted the confirmed list of the Government Land Sales programme in the first half of next year to meet the strong demand for private homes.

Unlike sites listed on the reserve list, confirmed-list land sites are put up for sale at a pre-determined date, without the need for the sale to be triggered by an application from developers.

Last Friday, the National Development Ministry said that it would place eight residential sites on the confirmed list for the first six months of next year.

That definite increase in residential land for sale is expected to have a dampening effect on overall home prices.

‘We would view the comments made by the MAS as more of a pre-emptive signal for now,’ said Donald Chua, an equity analyst at CIMB here in a note to clients.

‘A low interest rate environment coupled with strong property demand has led to fears of rising speculative activity.’

However, since the recent measures to discourage speculation were announced, ‘the euphoria on property has clearly cooled down in recent months, which should lead to more normalised property demand’, he added.

If the latest measures aren’t effective in curbing home price increases quickly enough, the government’s next step could be to reduce the limit on how much of a property’s price may be financed with a bank loan, from 80-90 per cent now, Mr Chua said.

Banks’ loan exposures to the property sector remain in line with historical trends, MAS said.

Its most recent aggregate bank lending data show that half of all Singapore-dollar bank loans at the end of September were to the broad property sector, with business loans to the building and construction sector making up 17.8 per cent of total bank lending, and consumer housing loans contributing another 31.6 per cent.

Source : Business Times – 10 Nov 2009