CapitaLand’s China residential sales will shatter records this year: analysts

It raked in RMB11.6b from almost 7,000 units as of Q3.

FY15 is set to be a bumper year for CapitaLand China, according to a report by DBS. Residential sales so far in the year have already soared to a RMB11.6b record high in Q3, which will be the highest level in 4 years.

But CapitaLand isn’t ready to rest on its laurels just yet as it’s rolling out more strategies to further optimize profitability on its China assets.

Primarily, it’s diving into deepening its presence in the country by focusing on its Tier 1 and Tier 2 cities. Thanks to increasing foreign direct investments, a growing pool of workers on rapid urbanization rates, and connectivity improved by infrastructure development, there is no dearth in demand.

CapitaLand is also setting its sights on prime land. It intends to land-bank mergers and acquisitions as well as joint venture projects with partners that have access to prime land, and it’s open to working with local government agencies on urban renewal projects to access prime sites on discounted costs should the possibility arise. 

Lastly, the company is warily handling its capital. It’s keen on keeping overall project costs as low as possible by being discerning with land tenders, especially with the raised land pricing levels. It’s also dead-set on raising returns by shortening projects’ development cycle and keeping a scrutinizing eye on costs.

Looking ahead, CapitaLand’s recently purchased plot of land in downtown Guangzhou is expected to offer longer term earning visibility. The project’s first phase, out of a total of 10 plots, is expected to be launched from 4Q15 onwards.

“In the pipeline the group has over 7m sqm of GFA of which over 2,000 units launch ready in the pipeline in 4Q15, mainly in the cities of Beijing, Guangzhou and Chengdu, Hangzhou,” notes DBS.