There are “very encouraging” signs across the real estate market in China, major Asian developer CapitaLand said last week.
“China remains a bright spark,” Andrew Lim, group chief financial officer of CapitaLand Group, told CNBC’s “Squawk Box Asia” on Friday.
His comments were made following the company’s announcement that profits for the first half of 2020 fell 89% to 96.6 million Singapore dollars ($70.5 million), from 875.4 million Singapore dollars a year ago.
Revenue was 4.9% lower, “mainly due to rental rebates” and lower contributions from malls and residential projects, the press release said. CapitaLand provided rental relief to tenants that were hit hard by partial lockdowns due to the coronavirus crisis.
Earnings before interest and taxes also dropped 71% from 2019. Singapore and China remain the “key contributors to EBIT,” accounting for 74.1% of earnings before interest and taxes.
Shoppers visit Raffles City mall, operated by CapitaLand Ltd., in Chongqing, China, on Wednesday, Nov. 27, 2019.
Qilai Shen | Bloomberg | Getty Images
Lim noted that China was “first in to the pandemic, but also first out.” Covid-19 was initially detected in the Chinese city of Wuhan in late 2019, and China was able to lift movement restrictions and restart economic activity earlier than the rest of the world.
“If you look across our China businesses, you’ll see very encouraging signs in our residential business, our retail operations and in the … appetite to look at acquiring and disposing of properties,” he said.
He added that the company is “very actively” looking to replenish its land bank in China, where appetite has “very clearly” returned.
CapitaLand Retail China Trust, a REIT which manages 13 shopping malls in eight Chinese cities, recently said it is “optimistic” that it can expand its mandate beyond the retail space, Lim said. “That’s something that, if we can do, we will certainly help them do so.”