Singapore's CapitaLand set to expand Japanese portfolio

CapitaLand set to expand Japanese portfolio
02 September 2005 2134 hrs (SST) ChannelNewsAsia

TOKYO : Singapore's property giant CapitaLand is all poised to expand its portfolio in Japan with a kitty of more than US$1 billion.

The property market in Japan is seeing an upturn after being in the doldrums for more than a decade, and CapitaLand is eyeing for a bigger bite into the world's second largest economy.

CapitaLand's first hotel in Japan is the 548-room Swissotel Nankai Osaka.

However, this property will be sold with 40 other hotels to a US real estate investment firm Colony Capital as part of a divestment plan by CapitaLand's hotel arm, Raffles Holdings.

But this does not mean the end of CapitaLand's presence in Japan.

The Ascott Group, a subsidiary of CapitaLand, has managed to secure a strategic alliance with a Japanese real estate firm.

This will allow Ascott to penetrate the serviced-residences and corporate leasing market in the country.

The Ascott now manages 336 serviced-apartments housed in two Tokyo properties, Somerset Azabu East and Somerset Roppongi.

Said Cameron Ong, CEO of The Ascott Group, "Primarily we have the technical know-how, and they have the know-how of the local environment, the culture, and that would actually speed up the momentum and help us understand the local environment far better. We want to establish our growth plan in Japan and both parties are prepared to invest money into it and grow to 1,500 units by 2010."

Meantime, backed by strong investor demand, CapitaLand saw a four-fold increase in the CapitaRetail Japan Fund, reaching almost US$400 million.

The group is now out to buy retail malls like the Izumiya Hirakata, a lucrative suburban mall in Osaka.

Said Jason Chew, country manager of CapitaLand Japan, "Every country is different, especially for retail, because retail is a very local market. But when we try to implement, for example traffic counters -- do you want to bring in traffic counters so that we know exactly how many people come in at what time? How many cars are coming in? Are carparks fully utilised? And if they're not, can we better make use of it to say convert it to retail space?"

CapitaLand has also acquired three rental apartment properties following a property joint venture with Arcapita Bank, a Bahrain investment bank in May.

These include The Grand View, a 57-unit apartment block in Osaka.

It hopes to capitalise on the strong demand for mid-market rental apartments in key Japanese cities.

Unlike most of the other foreign real estate investors, CapitaLand is setting its sights beyond just simply Tokyo.

It believes this will help bring greater returns on its investment in the rather mature, yet still highly lucrative Japanese market. - CNA /ct