China a key contributor to Keppel Land's profits

August 14, 2008
China a key contributor to Keppel Land's profits
Its main focus there is on building premier residential properties
and townships
By CHUANG PECK MING

OVERSEAS operations account for about half of Keppel Land's profits -
and China is the main contributor.

The property arm of Singapore-based Keppel Group, Keppel Land, first
ventured into China in the 1990s as part of its regionalisation drive
which also covered Vietnam and Indonesia. There, it has focused on
developing premier residential properties, townships and waterfront
lifestyle projects. Evergo, Keppel's China-focused subsidiary, has a
land bank of 4.5 million square metres in Chinese second-tier cities.

'At present, we have more than 60,000 residential and township homes
spread across Asia,' a Keppel spokeswoman says. 'Our current focus is
on the key regional economies of China, Vietnam, India and Indonesia
as we believe these markets have substantial growth potential, with
sustainable demand for quality housing underpinned by strong economic
fundamentals, urbanisation and favourable demographic trends.'

Keppel Land, which posted sales turnover of $459 million in the first
half of this year, has operations in the northern Chinese cities of
Beijing, Tianjin and Shenyang.

'We entered these markets in 2002, 2005 and 2007 respectively,' the
spokeswoman says. 'Beijing is the capital of China and a key gateway
city. We began our northern operations here to bring the Keppel
hallmark of quality and innovation to the Beijing market.'

She notes that Tianjin, China's third largest city, is one of the
four autonomous municipalities along with Beijing, Shanghai and
Chongqing. 'Under China's national strategic development plan,
Tianjin is poised to become the centre of the Huan Bohai Economic Rim
and serve as the next engine of growth.'

Shenyang, the capital city of Liaoning Province, is an important
economic, industrial, commerce and transportation centre in north-
east China. 'As the Chinese government implements its plan to
revitalise the north-east, the fast track economic and income growth
in Shenyang will continue to spur housing demand,' the spokeswoman
says.

She says the city offers a good market not just because of its
healthy economic growth, but also its business-friendly
environment. 'More importantly, we believe we have a competitive edge
in this market.'

The Chinese market is challenging - and it requires some good local
insights and understanding, especially for north China, according to
her.

'Relationships are also very important,' she says. 'A successful
business deal here is highly dependent on good connections between
transacting parties.'

On Keppel's venture into Shenyang last year, the spokeswoman
says: 'We need to quickly understand it and incorporate requirements
which are different from those in our current projects in Beijing,
Shanghai, etc. We are doing so by localising our management and
operational team with staff that are familiar with such extreme cold
weather environment as well as the unique local industry practices.'

Being a newcomer, Keppel Land has to build up connections and
experience from scratch. But the spokeswoman adds: 'We are (also)
leveraging on the good brand equity of Singapore and Keppel Group's
network with the local government authorities and business community.'

Keppel currently has a staff of about 50 on its payroll in Beijing,
where the company has sold out 1,859 residential units in a housing
project. It has around 40 employees in Tianjin where Sembcorp is
developing its first 168-unit villa project. More than half of the
units launched has been sold, according to the Keppel Land
spokeswoman.

As for Shenyang, the company has begun assembling a core team. Its
present staff is about 30-strong. 'Piling work has just started last
month and we are looking forward to clinching more projects in
Shenyang,' the spokeswoman says.

Keppel will continue to explore new opportunities in north China,
especially in key cities and growth zones in the Huan Bohai region,
according to her. The company will focus on 'city in-fill' and
township developments.

Keppel is also gearing up for the Eco-City project in Tianjin. In
November 2007, Singapore and China inked a framework agreement to
build an Eco-City in Tianjin. The project covers 30 sq km within a
designated resort and recreation zone in Tianjin Binhai New Area. The
latest green technology and environmentally friendly systems in water
recycling and waste treatment will be used in constructing Eco-City.

Upon completion in 10-15 years, Eco-City will be a showcase for
sustainable development and a model for other Chinese cities striving
to balance rapid economic growth and environmental protection.

'The Eco-City will be developed by consortia from Singapore and
China, with Keppel Corporation playing a lead role,' the spokeswoman
says. 'Keppel Land, as part of the Keppel Group, will be involved in
the development of this Eco-City.'