Here's proof that Singapore developers are gaining steam in China

Guess who's leading the overseas race?

According to Maybank Kim Eng, most of the developers under its coverage are increasingly looking to diversify overseas, particularly in China.

Here's more:

We concur with such a move as long as they do not overpay for land. We believe China’s market will continue to be underpinned by growing affluence and the urbanisation process and favour names with a proven track record in that market.

As long as they stay financially disciplined and prudent, we reiterate our BUY recommendations on CMA, CapitaLand and Keppel Land. We like the trio for their diversification into China as we expect them to continue to benefit from the country’s rising affluence and ongoing urbanisation process.

CMA is our top pick because it has and, we believe, will continue to deliver growth out of its China portfolio, which currently comprises 51 operational malls and another 11 under construction.

Besides new acquisitions and mall openings, its existing malls are enjoying healthy rental reversions backed by strong tenant sales growth. We project China will make up over one-third of CMA’s core EBIT by 2016, assuming no acquisitions are made in between.

CapitaLand offers more diversification across asset classes, and with the strategic roadmap in place, we expect to see more investments in mixed developments.

Currently, four of its eight Raffles Cities in China are in operation, but by 2018, all eight are expected to be completed, providing a steady stream of rental income. We believe the option of eventually listing this unique portfolio as a China-REIT still stands, especially if the laws governing REIT listings are finalised and implemented in the next few years.

Keppel Land is also intent on diversifying its operations in China beyond the traditional residential development. Besides owning 51% of a prime commercial development in the heart of Beijing’s CBD, Keppel Land also acquired a 34% stake in Life Hub@Jinqiao, which is a popular suburban mall in Shanghai.

Life Hub@Jinqiao is managed by 20% co-owner the Chongbang Group, and we think this collaboration may be a positive first step for Keppel Land to accumulate expertise to manage its own portfolio of retail assets in China in the future.