Happy New Year to all of you!
We have done well with a strong set of financial results for 2015 despite the volatile markets. I would like to thank you for your hard work and sacrifices as this outcome would not have been possible without everyone putting in great effort.
I expect the real estate industry to continue to be impacted by rapid economic, technological and social changes – the mindset of ‘build it and they will come’ will no longer hold true. With technology disrupting jobs and businesses every day, the future can be uncertain, unpredictable, volatile and complex. Many of you started the transformation journey with me for CapitaLand in 2013. Much of what we have done in 2015 and what we will be doing in 2016 and beyond is to take action to prepare CapitaLand well for the Future. In this light, I would like to share my thoughts on the Future of Real Estate as we continue this journey of transforming CapitaLand.
Future of Real Estate – Sustainability transforms design of buildings
Moving ahead, the concept of sustainability will likely be broadened to encompass creating places where people can enjoy living, working and playing. As successful cities attract more and more people, CapitaLand has to become more innovative in designing and building our real estate, seeking to use spaces more efficiently and effectively to deal with growing urban density.
In November 2015, The Interlace was named the prestigious World Building of the Year at the World Architecture Festival. This CapitaLand residential project in Singapore – defined by its unique interlocking, stacking design with lush greenery, extensive facilities catering to all ages and beautiful artworks – triumphed over 338 entries from all over the world, a testament that good architectural design can enhance our living environment immensely and offer opportunities for novel lifestyle experiences.
Through the use of innovative construction technologies and advanced ‘design-and-build’ methods, our office building CapitaGreen was completed in 36 months, compared to the industry average of 40-42 months it would take to complete a building of this scale. With a striking green façade and rooftop wind scoop, the official opening of CapitaGreen in September 2015, marked a significant milestone in CapitaLand’s sustainability journey.
When we launched the Building Communities - Setting the stage for Singapore2065 (#BuildSG2065) crowd-sourcing campaign in 2015 to commemorate SG50, we had two objectives – one was to engage and rally the people in thinking about the future of Singapore, while the other was to understand what people, our customers, want in their future built environment. We were impressed by the over 2,000 creative ideas submitted by the participants, aged from four to 80. People dreamt of multiple-use spaces with greenery, good air quality and greater connectivity with other people, buildings and the surroundings. The campaign affirmed our view of the future – integrated and interconnected buildings and communities.
Future of Real Estate – Harnessing technology is mission-critical
As the pace of technological advancement within the real estate sector quickens, consumer spending and the culture of work will be dominated by a generation that has grown up in the digital world. Social networks will determine where and how people connect and communicate. Harnessing technology to improve interconnectivity has therefore become mission-critical – we need it to drive customer engagement, mine data for insights and improve operational efficiency.
In retail, physical stores still have a role to play; what has changed is the expectation of a customised experience, enhanced with added value and convenience. Shopping malls that can integrate retail with restaurants, entertainment and social life will be the most appealing. For example, CapitaLand's Clarke Quay is notching up as Asia’s leading F&B; and entertainment hub, especially with world-class dance club Zouk targeting to open its doors to club goers in June 2016. We are also excited about the redevelopment plans to enhance the site at Funan DigitaLife Mall. The new integrated development is set to become an experiential creative centre within Singapore’s civic district, where it is envisioned to serve as a technology-enabled hub to connect retail, cultural, learning and business opportunities.
2015 also saw the launch of our CAPITASTAR Version 2.0 in China, bringing membership for our CAPITASTAR cardless loyalty programme to 2.2 million members in Singapore, China, Malaysia, Japan and India. With the aggregated data of our members’ shopping preferences gleaned from CAPITASTAR, we are able to help our retailers improve their service and productivity. CAPITASTAR also offers CapitaLand a platform to engage with our shoppers and integrate our products and services into their lifestyles. Coupled with the launch of “Rent-A-Space” casual leasing portal for our malls in Singapore, and also our e-commerce pilot – Food-to-Go in Raffles City Singapore and Project Just Use at Capital Tower, we are one step closer to providing seamless O2O experience, combining physical (offline) and online platforms for our customers. This competency to provide integrated and tailored solutions for our customers through better use of technology will be a key differentiating factor for us.
Through Ascott, we invested in Tujia.com International, China’s largest and fastest growing online apartment sharing platform. Ascott’s more than 6,000 rooms in China are now accessible on Tujia.com as well as Alitrip, and the listing will soon be expanded to include our global portfolio. We also announced our collaboration with Samsung in April 2015 to offer smart living experiences at Ascott’s next-generation serviced residences. Meanwhile, homebuyers can now browse 11 of CapitaLand’s residential developments in China on JD.com, one of China’s top three e-commerce platforms, and benefit from exclusive deals from Jia.com, China’s leading renovation, furnishing and home services e-platform. Looking ahead to 2016, we are looking forward to our collaboration with Alibaba and Baidu.
From an operational perspective, technology will make eco-efficient buildings more practical. As we ready 'Project Deep Blue' to start supporting smart appliances, smart meters, smart building management systems and integrated energy management systems in 2016, do look out for these buildings to see how they are going to get ‘smarter’ with better connectivity.
Future of Real Estate – Real estate capital takes financial centrestage
As real estate capital values rise with the growing intensity of competition for assets, CapitaLand’s deep presence in many key gateway cities, our strong fund management expertise across various asset classes, from integrated developments, residential, shopping malls to serviced residences as well as our established developer-owner-operator capabilities, will allow us to deliver better risk-adjusted returns for investors. We have set a target in 2015 to scale up with six new funds worth up to S$10 billion by 2020. Ascott got the first boost through a US$600 million tie-up with Qatar Investment Authority.
Going into 2016, we are likely to see growing inter-regional real estate investment activity, which will further increase cross-border capital flows. CapitaLand’s strong balance sheet and stable of REITs give us the ability to stay invested for the long term in assets. This aligns us with capital partners with longer investment horizons such as sovereign wealth funds, pension funds and insurance companies.
Future of Real Estate – Think Global
As one of Asia’s largest real estate developers, CapitaLand is present in over 140 cities in more than 20 countries with S$75.2 billion in assets under management; obviously our aspirations take on a global scale. By harnessing the synergies of a global ONE CapitaLand network supported by strong local knowledge, we are already seeing benefits, reaped especially from economies of scale.
The recent announcement that the third government-to-government project between Singapore and China will be in Chongqing is also a boost for CapitaLand. This new partnership seeks to improve connectivity through infrastructure building to stimulate growth in the Chongqing region and accelerate its development to become the next financial and business centre of China. Coupled with the ‘One Belt, One Road’ strategy, I foresee that it will spur international and domestic demand for real estate and serviced residences as well as increase overall consumer spending. We already have six properties spanning about 1 million square metres in the city, comprising shopping malls, serviced residences and Raffles City Chongqing. We will leverage our presence and headstart in the market to serve this demand and seize new growth opportunities.
Headquartered in Singapore – which gives us access to the Southeast Asian markets, we expect more opportunities for cross-border collaboration with our growing presence in ASEAN. For example, Vietnam is now CapitaLand’s third largest market in Southeast Asia and one of our fastest growing in the region. Following the addition of two residential projects in 2015, CapitaLand now has a portfolio of about 7,850 quality homes across eight residential projects. Our Vietnam serviced residences portfolio has also grown to more than 2,400 units in 15 properties – across Ho Chi Minh City, Hanoi, Hai Phong, Da Nang and Binh Duong.
Given our presence in over 20 countries globally, local businesses will be able to tap our network in Asia, Europe, Australia and North America to grow regionally and internationally. Vice versa, international companies can also benefit from our extensive in-country footprint to extend their influence within the local markets.
Ascott is the world's largest international serviced residence owner-operator, with a portfolio of more than 43,000 units in over 270 properties; including our first foray into the United States in early July with an acquisition of a prime property in Times Square New York. Such an expansive footprint demands an intimate understanding of the market and an ability to establish the right local alliances. Through Ascott, we have been able to make successful inroads into many new markets in 2015 via investments, management contracts, strategic alliances and franchises; and we are very much on track to double our portfolio to 80,000 units by 2020.
Future of Real Estate – Integrated and Interconnected
2016 will mark the 30 th anniversary of our flagship Raffles City brand of integrated developments. Our first Raffles City development, Raffles City Singapore, marked the beginnings of the brand that epitomises the ‘city within a city’ concept which we have brought to China with eight other Raffles City developments. We now have a total of nine Raffles City developments in Singapore and China, spanning about 4 million square metres and worth about S$15 billion when fully completed.
They are strategically located in gateway cities, built atop transportation nodes, designed by star-architects and showcase our unique multi-sector real estate expertise in creating integrated communities, combining shopping malls, serviced residences and/or hotels, offices and homes. As integrated developments becomes more sought after as a viable urbanisation solution, I know many colleagues are working hard to bring Raffles City to a lot more gateway cities, we must give them our support as ONE CapitaLand!
Another integrated development we can all look forward to hearing more of in 2016, will be our project at Cairnhill Road, Singapore. It will comprise a luxury residential tower and our second Ascott-branded serviced residence in Singapore. This development is set to become the next landmark addition to the Orchard Road district – Singapore’s No.1 shopping haven and cosmopolitan playground flanked by distinctive and iconic shopping malls, restaurants and hotels.
Future of Real Estate – Project Global Excellence
As we prepare for the challenges that lie ahead, we must harness technology not only for the products and services that we deliver to our customers, but also for our own internal operations and processes. Technology will be a powerful enabler to integrate us more coherently so that we can forge ahead as ONE CapitaLand. By fostering better cost management as well as improving data analytics, communication with stakeholders and regulatory reporting, it will provide us greater organisational agility so that we can move nimbly to identify, assess and seize new opportunities.
To that end, we will be launching Project Global Excellence in January 2016 to shift all business units to a common, integrated enterprise resource planning system. This is a transformation journey that will touch all of us, but our goal at the end of this journey is an integrated CapitaLand that is well-positioned to be at the forefront of the future landscape
CapitaLand will need to continue building sustainable communities where people can enjoy living, working and playing. Given the impact of rapid economic, technological and social changes, this will not be an easy task. What will remain constant amidst the uncertainties and a rather fluid environment will be our core values of Respect, Integrity, Creativity and Excellence; and our vision to become a leading global enterprise that enriches people and communities through high-quality real estate products and services. I trust that most of you have joined and stayed with CapitaLand because you believe in what the company stands for. I’m confident that together, we will be able to make sense of the uncertainties and move ahead with courage as ONE CapitaLand.
On this note, let me thank all of you for your support, commitment and passion in embarking on this transformation journey with me to make CapitaLand a more nimble, as well as a more innovative and creative organisation.
Here’s wishing you a Happy New Year and a great 2016 ahead!