Chasing speculation in China’s housing market levels the game: CapitaLand



Easy loan is becoming less and less available in the Chinese real estate market, but CapitaLand Group’s Andrew Lim says economically prudent firms can benefit.

“In the current environment, when other companies may face more serious financial problems without access to credit, we are now in a position to kind of level the playing field,” Lim, Chief Financial Officer of the CapitaLand Group, told CNBC’s Squawk Box Asia. Tuesday. “We are certainly seeing these opportunities emerge and are trying to figure out how best to take advantage of them.”

China is an important market for CapitaLand and accounts for about 40% of the Singapore property giant’s portfolio, according to its latest business data. The firm claims to be “one of the earliest foreign real estate players in China” with a portfolio of over 200 properties in over 40 Chinese cities.

The Chinese authorities have been trying for several months to cool the country’s real estate market by suppressing speculation. One of the firms in the spotlight is a large developer. Chinese group Evergrandewho is working on a solution his debt situation

In July, China’s Ministry of Housing said that the country is aiming to eliminate disruptions in the real estate sector within three years.

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Lim said, however, that real estate speculation is not limited to China. He added that signs of this behavior “are reappearing in many markets.”

“I think this is the idea that in the absence of other investment opportunities, real estate is often the most popular sector,” Lim said, adding that this tends to lead to speculative behavior, especially in residential real estate.

Governments are now responding to growing speculation, and in China, Lim said, authorities have taken “very decisive steps” to cool the sector and reduce speculation in the housing market.

However, the measures hurt developers who relied on speculative buying and used loans to expand quickly, he explained.

“To continue to thrive, you need to be able to kind of complement the operating model in China so that you can use this to your advantage, relying on your own as well as other third-party sources of capital,” Lim said.


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