2012年3月19日 星期一

CapitaLand Sees Plenty of Spark in China


Despite all the hand-wringing over China's growth trajectory, the Middle Kingdom remains a land of milk and honey for Singapore real-estate company CapitaLand Ltd. President and Chief Executive Liew Mun Leong is a longtime bull on China's property market, often expressing confidence in the macroeconomic fundamentals that fuel housing and commercial-property demand there.
Under his leadership, the developer—Southeast Asia's largest by market value—expanded aggressively into China over the past decade, and now owns there a portfolio worth about 12 billion Singapore dollars ($9.5 billion), or 38% of the company's total assets, including residential properties, offices and shopping malls.
Bloomberg News
CapitaLand president and CEO Liew Mun Leong
CapitaLand's China push isn't without its detractors, especially among investors who have shied from the stock amid rumblings of a possible hard landing for the Chinese economy and its softening property market.
But Mr. Liew remains unfazed. "Urbanization and economic growth will support demand, and the Chinese people love to buy their own homes," he said. "Also, there's no alternative class of investment—they can't invest outside of China, they don't understand anything about equities, but they understand how to buy an apartment."
Mr. Liew shared with Chun Han Wong his views on real-estate trends and management experiences. The following interview has been edited.
WSJ: How has recent market turmoil and global economic woes affected real-estate investment in Asia? Are you concerned about policy risks in your key China and Singapore markets?
Mr. Liew: Asia is still attractive for investors, but they will be selective. For instance, I doubt they will put much money in India. Instead they would look at countries like China, Singapore, Hong Kong, while the more daring ones may put money in Vietnam, even if they may be worried about the macroeconomic situation there.
Cooling measures are good. We'd be worried if there weren't any; that means people will be speculative, and bubbles will generate. If there are cooling measures, we will account for them, but we won't slow down or halt our investments.
After the global financial crisis, we bought [Orient Overseas (International)'s real-estate business] for US$2.2 billion. Now with the euro-zone debt crisis, we've put S$4.3 billion in Chongqing [for the Chaotianmen mixed-used project]. We can do this because we do our capital management on a long-time-horizon basis.
For China, we're there for the long term; we have always reinvested our profits there. With the recent cut to the reserve-requirement ratio, China has signaled that they know they have to relax. It won't be sudden; it will be incremental.
In Singapore, there's still an underlying shortage of residential units. From 2005 to 2011, the resident population grew 9.3%, or 320,000 people, but the number of dwelling units increased only by 6.4%, or about 70,000 units. The government may intervene from time to time, but the demographics are positive.
WSJ: Credit availability in China is a concern for some real-estate market watchers. How might the industry be affected?
Mr. Liew: The days in which small developers can get started by borrowing a hundred million yuan are gone. Consolidation is possible; more and more will realize the burden of debt and run into trouble. If these companies have good assets, we will look at them for possible acquisitions.
During the global financial crisis, we secured over 20 billion yuan (US$3.16 billion) in credit allocation from the likes of Bank of China, ICBC, Agricultural Bank, and China Merchants Bank. It's a flight to quality. They have to lend, and between some small Chinese companies—in which they have little confidence—and CapitaLand, who would they choose to lend to?
WSJ: What about prospects closer to home in Southeast Asia and India?
Mr. Liew: I think Vietnam will grow very well in the next five to 10 years. It's a big economy with a young population—the Vietnamese are hardworking and very prepared to learn—and has got stable government as well. We have a presence in India—serviced apartments and some shopping malls—but progress is slow. We haven't made money yet. I worked on an IT project in Bangalore back in 1993, but from then till now, I haven't seen any visible signs of change in the business environment.
WSJ: What's your approach to managing your large work force and businesses in more than 20 countries?
Mr. Liew: I don't manage the business; I select the right people and manage them. We've been successful in attracting and retaining talent and the key is staying close to them. I spend a lot of time on people—interviewing them, looking at their training, reviewing their postings, and visiting overseas staff regularly. Every year, I give lectures on management and leadership for two days, eight hours a day. Anyone can write to me, and I get many responses to my weekly emails to staff, which address a broad range of business and human topics in a casual, conversational tone.
We also devise a lot of family-friendly policies. For instance, every employee can book a free four-day stay at our Ascott (serviced residences).
WSJ: During the financial crisis, you cut your pay by 20% to avoid retrenching staff. What was the philosophy behind that move?
Mr. Liew: As a company, we all have to pool together and suffer together. I call it the "theory of common happiness and common misery"—something I learned from my days in the Ministry of Defense. I always tell my staff: "I'm not the lao-ban ("boss" in Mandarin). I'm also a salaried worker." I wasn't born with a silver spoon in my mouth; I champion the proletariat.
WSJ: What did you take away from your civil-service experience, and how did you manage your transition into the private sector?
Mr. Liew: The civil service taught you integrity—we were "brainwashed" into being honest—and the importance of good corporate governance and compliance. You also learned how to work with systems, and deal with people and policy makers. The Singapore government is very paranoid; they plan for everything. I worked at the Ministry of Defense—and the concept of defense is founded upon paranoia—so I learned to be even more paranoid and plan for things.
But I think I am basically a private-sector person, but was caged in the public sector for too long before I was released to become my natural self. By nature, I am outgoing and more prepared to take risks.
Write to Chun Han Wong at chunhan.wong@dowjones.com
Education: Bachelor's degree in civil engineering, University of Singapore (now the National University of Singapore)
Career: 22 years in the public sector; chief executive of L&M Investments; president of Pidemco Land, which merged with DBS Land to become CapitaLand
Interests: Daily treadmill jogs and qi-gong exercises.