The retail property unit of CapitaLand Ltd. (CAPL), Southeast Asia’s largest developer, has 2 percent of its assets in India, said Lim Beng Chee, chief executive officer at CapitaMalls. China makes up 42 percent of its S$6.67 billion ($5.2 billion) assets, the biggest after its home market in Singapore.
“Compared to China, we think there is scope for the pace of doing business in India to be accelerated,” Lim said in an e-mailed response to queries. “In China, decisions and policies are centrally driven and as such, the pace of development has been very rapid. India, on the other hand, has a market economy and greater decentralization in decision-making, which has resulted in the pace of development being a bit slower.”
CapitaMalls, which started in China with a Shanghai project in 2003, now has 42 shopping centers in the country with plans to open seven this year, and another seven starting in 2013, it said in an exchange filing yesterday. In India, the developer began operations in 2006, and has two properties with plans to open seven new malls starting next year, it said.
In India, “we note that the government has also put on hold plans to liberalize the country’s retail sector,” Lim said.
The Indian government’s attempts to open up the retail sector to foreign investment last month have been stymied by protests from allies and opposition parties. The Congress party-led government’s legislative agenda has stalled in the past year after corruption scandals, including one linked to a 2008 sale of mobile-phone airwaves, sparked protests on the streets and in parliament.
Asia’s third-largest economy expanded 6.9 percent from a year earlier, the smallest advance in more than two years, government data on Nov. 30 showed. The Indian currency is the worst performer in Asia in the past year as the widest current-account deficit among the major economies in the region spurred outflows amid concerns the European debt crisis is deepening.
Property sales have slumped in India’s biggest cities as the Reserve Bank of India raised borrowing costs 13 times by 3.75 percentage points since March 2010 to cool inflation. Central bank Governor Duvvuri Subbarao refrained from increasing the benchmark repurchase rate on Dec. 16 for the first time in eight meetings and said Dec. 22 that the pace of growth this financial year may be slower than an estimated 7.6 percent.
India Retail Fund
CapitaMalls said its investment in India is through its S$880 million CapitaRetail India Development Fund, which it has a 45.45 percent stake. The company has partnered with the Prestige Group, a south India-based developer, for retail projects in the southern cities, and tied up with Advance India Projects Ltd. for its developments in North India.
The developer opened two malls in India, one in the southern city of Bangalore and the other in Udaipur in the north of the country. The occupancy rates for the two properties average was 96.1 percent as of September, according to the exchange filing, in which it called India an “emerging star.”
CapitaMalls will focus on three key markets, which include Singapore, China and Malaysia, Lim said. The developer is looking for investment opportunities in Japan, which is an attractive market for the company, Lim said.
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