Shanghai­­—the springboard for its business endeavor in China

In an attempt to make its debut in the Chinese real estate market as early as 1994, Capitaland chose Shanghai as the springboard for its business endeavor in China. As a wholly owned, China-based subsidiary of the Singapore-headquartered Capitaland Limited, one of the largest listed companies of its kind in Asia, Captialand China, following the consistent practice of its parent company, attempts to build its industry chain involving residential buildings, office buildings, serviced apartments, property management and real estate finances. The march of Captaland China into the Chinese market synchronized Shanghai’s endeavor to develop its Pudong New Area, with the real estate innovation in full swing and the rise of Shanghai as the powerhouse of China’s economic growth, a golden opportunity and a Promised Land open to investment.

2004 marks the tenth anniversary of Capitaland China’s entry into Shanghai. Looking back to the past ten years, Capitaland China invariably finds itself charmed with the amazing progress and development of Shanghai and gratified with its choice of the city as its take-off pad. Until now, Capitaland China has made an investment of RMB 16 billion, with 70% of its investment in Shanghai alone. It has launched, with immense success, a number of projects in the area of residence, including Chrysanthemum Park, Manhattan Heights, Summit Panorama, Summit Residences, La Cité and Oasis Riviera. Its office portfolio consists of Pidemco Tower, Raffles City Shanghai and Luwan Office project. Through these projects, Capitaland China has made its way to the seven districts of Shanghai, including Huangpu, Jing’an, Xuhui, Luwan, Changning and Pudong New Area. The company is currently engaged in some residential developments in Minhang District and Baoshan District respectively. In addition, it is, together with the Ascott Group, another subsidiary of Capitaland Limited, offering management service to three serviced apartments. The Shanghai-based Premas International commits itself to real estate consultant service across China. As the same time, Raffles International Hotels Group is trying to introduce its flagship brand of Swiss Hotel to Shanghai. As it is, Capitaland China has struck its root in the land of Shanghai and thrived on its fertile soil to spread its exuberant crown to other cities across China.

With the knowledge and experience of Chinese real estate market it has accumulated in Shanghai, a Shanghai-established management and technology team made up of both natives and expatriates and the ideal location of Shanghai in terms of geography and economy, Capitaland China has sunken it teeth into the business of residence development and is planning or has launched aggressive marketing operations in such places as Beijing, the hub of north China, and Guangzhou, the center of the Pearl River Delta. Capitaland China has also expanded its reach to such big Chinese cities as Guangzhou, Wuhan, Dalian, Tianjin and Xiamen, etc. it is at the same looking for further business opportunities in some second-line cities. As the leading city in China’s strife for economic development, reform and opening to the outside world, Shanghai, with its rich humanity and unique charm, will be given top priority in Capitaland’s investment in China.

Captitaland China in full play in the Overseas Market

Ten years of effort has secured Capitaland China a well-established brand and reputation in China, the second largest overseas market in terms of investment (second only to Australia). The financial report of Capitaland Limited in the 2003 fiscal indicates that Capitaland China, with a mere 7% of the total assets, made a hefty contribution of 31% to the gross margin of Capitaland Limited. It has become one of the most important profit centers of Capitaland Limited. It is the successful performance of Capitaland China in Shanghai that has ensured a steady and healthy development of Capitaland China’s operations in China. And the group has declared its plan to double its investment in China in the five years to come.

Shanghai is one of the most populous cities in China, with more than sixteen million resident population and near four million transient population, ranking the first in terms of both density and size in China. Shanghai is at the same time one of the most affluent cities in China, with a per-capita GDP surpassing $5000 and an annual rate of growth surpassing 10%. In addition to such supporting socioeconomic factors, its magnitude of bosom to accommodate talents from all parts of the world makes Shanghai an incontrovertible regional market in China. With the intensification of the opening drive and internationalization, Shanghai has been improving its business environment for investment. Aside from people from other parts of the country, who are gathering at Shanghai in ever-increasing numbers, a growing number of multinationals, overseas investors and management personnel are devoting themselves aggressively to the development and construction of Shanghai and have made their homes in Shanghai. A survey shows that Shanghai enjoys a high level of opening-up and internationalization, an environmental, climatic and sanitary desirability, availability of conveniences for foreigners, and an integration of different cultures, which consists of the various elements that appeal powerfully to the foreign investors. Mr. Lin Mingyan, Singaporean president with Capitaland China, serves as a best example, who, as a winner of Magnolia Prize, made home in Shanghai Several years ago and have made Shanghai his second hometown.

As a real estate developer, Capitaland China has a keen sense of this fact. As can be exemplified in the selling of residential properties, the total number of residential units has come close to 10,000, including both those have been constructed and those that are under construction. And 90% of the newly introduced residence units, such as the Elite House, La Cité and Oasis Riviera, have been sold, some of which were sold out soon after they were introduced to buying public, setting one record after another in the number of houses sold. Of all our medium- and top-grade residential buildings, 10% are sold to foreign customers. Apart from the few investors, a vast majority of them are foreigners who settle here in Shanghai as resident workers. In the serviced apartment under the flag of Ascott Group, there is a marked annual increase in the number of resident top management personnel from overseas companies. Our first-grade office buildings have attracted a large number of multinationals. The Pidemco Tower, located in Huangpu District, has reached an occupation rate of 99%. The Raffles City, introduced to customers this year, has reached an occupation rate of 96%. A number of multinationals, including American President Lines, Agilent, Trane, Nippon Yusen Kaisha (Japanese Mail Steamship Company) and ABB, has made it their offices.

All This Has Profited an Efficient and Business-Friendly Government

Capitaland China has consistently adhered to and flourished on its law-abiding and compliant principles in China, which also serve as the only approach to a long term development. A series of macro-control policies have been mandated on both municipal and state levels on real estate industry, which have had a positive effect on the standardization of the real estate market. What we have achieved has everything to do with the mercantile attitude and the efficient performance of the Shanghai Municipal Government. As a foreign-invested real estate player, we need to deal with various government agencies, including development planning, urban planning, land and resources, construction, foreign trade and economic cooperation, administration of industry and commerce. In the course of our contact with them, we often hear the government officials refer to themselves as “civil servants”. Based on our experience with local governments in other parts of the country, such a keen awareness of their roles is rarely seen. In addition, civil servants at different levels here have shown a high level of qualification and service, with highly flexible ways of handling business.

For example, the Raffles Plaza, our flagship project on the People’s Square, with a total investment of approximately $350 million, was the largest independent financing project at that time. With the support from Shanghai municipal government and the joint effort from various sectors, the construction of the Raffles Plaza, beginning from 2001, was completed at an unprecedented pace and is now in operation. The opening ceremony of the Raffles Plaza in May 2004 witnessed once again the high efficiency of the government’s performance. Various government offices, including the Foreign Affairs Office, the Bureau of Public Security, and governments at the district level, were invited to the scene. Coordination and formality took only 45 minutes. The opening ceremony, which went on smoothly and beautifully, was unanimously well received by people of all walks of life, foreign or native. In addition, a number of merging projects in the outskirts of Shanghai received support from both local governments and the Municipal Foreign Investment Committee. Starting from our application to the Foreign Trade and Economic Department for the establishment of an enterprise to the receipt of the certificate of approval, and to the registration for alteration in the Administration of Industry and Commerce, everything went on quickly and smoothly, long before the deadline set by the government for the completion of the procedure. All this not only lowered the risk and cost on the part of the foreign investors, but also served as a tribute to the unexpectedly satisfactory efficiency of Shanghai Municipal Government, which in turn enhanced their confide in Shanghai as their investment destination.

The very nature of the real estate industry requires an automatic clearing on the part of the project companies after a few years of operation and the consequent return of capital stocks and profits to the overseas share-holders. In Shanghai, we have a keen sense of both the friendly attitudes of the government towards foreign investment and its philosophical free-come-and-free-go principle. Several applications for the cancellation/logout of enterprises got feedback in a few days and the relevant documents and procedures were finished easily as well, which showed the high level of qualification and service on the part of the local governments. Investors are deeply impressed by the lawful and orderly investment environment of Shanghai, as is mirrored in commendable makings of government in compliance with laws and regulations

Root Struck in the Land of Shanghai and Flower Blown across China

In the new millennium, Capitaland China has quickened its march into others parts of China. In October, 2002, with the approval of the Minister of Commerce, Capitaland China, the first foreign-owned real estate investment company, was founded in China. In April 2004, the company entered Beijing real estate market. In September, La Foret, a top-grade residential project located north of the Fifth Ring and east of the National Olympic Park, was launched in Beijing with a floor area of 270,000 square meters. Two other projects respectively in Chaoyang District of Beijing and Tianhe District of Guangzhou are under intense preparation.

Capitaland China adheres persistently to the corporate culture of human-orientation and meritocracy, pursuing the diversified strategy of localization. The greatest strength of the company lies in its powerful and internationally experienced management team along with its qualified staff members with their strong sense commitment and devotion. And Shanghai has become a place where Capitaland China trains its pool of management talents, who are then sent to different parts of China to take charge of the various projects in cooperation with local employees. Thus the company has not only guaranteed the persistency and unity of its culture and management philosophy, but also adapted its practices to the varying situations in different places, bring the greatest possible value to its share holders.