SINGAPORE (Kyodo) CapitaLand Ltd., Southeast Asia’s largest listed property developer, is poised to sharply expand its business in Japan as the economy has effectively overcome deflation, a symbol of its decade-long slump.
The Singapore-based real estate giant plans to up the number of shopping malls it operates in Japan to 15 or 20 from four in two years, said Pua Seck Guan, the chief executive officer of CapitaLand Retail Ltd., the retail property business unit of CapitaLand.
In value terms, the size of these commercial investments would quadruple to 147.0 billion yen from 39.1 billion yen.
“Japan’s economy has bounced back, which gives investors confidence,” Pua said. “We believe the long-term potential of Japan is there.”
Pua cited increased consumption propelled by Japan’s sustained economic recovery, which looks certain in November to become the longest continuous expansion since World War II.
“Since Japan is one of the largest investment markets in the world, we cannot ignore it,” he said in an interview, adding that CapitaLand operates in 80 major cities in 20 countries. “Besides, it gives us sufficient return.”
CapitaLand said it has acquired 13 rental apartment properties in Japan this year, bringing to 18 the total number it holds in the nation.
With the increase, CapitaLand has committed 75 percent of 30 billion yen worth of investment in the rental apartment field, a target it set when launching its rental apartment business in Japan in May 2005 with Bahrain-based Arcapita Bank, with an eye to drawing oil money from the Middle East.
CapitaLand said it will further raise its target portfolio size to 42 billion yen within a year, with the number of properties rising accordingly, as it sees greater profits from rent when land prices in Japan show signs of bottoming out in not only big cities but some regional areas.
According to Japanese government data, residential and commercial land prices in Tokyo rose last year for the first time in 15 years, a sign the country’s asset deflation may finally have come to an end. In July, the Cabinet Office dropped the word “deflation” from its monthly economic report for the first time in five years.
To facilitate CapitaLand’s business expansion in Japan — both through acquiring existing assets and developing new ones — Pua said the company is exploring local partnership opportunities, especially with retailers.
For the rental apartment business, CapitaLand already has a Japanese partner, Samty Co., an Osaka-based real estate company, making it easier for CapitaLand to boost business in the field, especially in the Kansai region.
In China, CapitaLand has partnerships with Beijing Hualian Group Investment Holding Co., the country’s sixth-largest retailer, and Shenzhen International Trust & Investment Co. to build malls anchored by Wal-Mart Stores Inc. of the U.S. in provincial cities across China.
“We want that we can secure certain relationships or tieups in Japan like what we’ve been dealing with in China, so we can increase the speed of expanding our portfolio size” in Japan, said Pua, who doubles as CEO of CapitaMall Trust Management Ltd., which manages Singapore’s largest real estate investment trust by asset size.
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