CapitaMalls to expand in Malaysia

CapitaMalls, a unit of property developer CapitaLand, views Malaysia as a key market in the region and it could develop new properties or buy existing ones

Singapore's CapitaMalls Asia Ltd is keen to expand in Malaysia and plans to have a property trust in the future is still on the drawing board.

CapitaMalls, a unit of property developer CapitaLand, views Malaysia as a key market in the region and it could develop new properties or buy existing ones, said its head for Malaysia Sharon Lim.

"Malaysia is a key market for us. We don't think we will stop at three malls," Lim said at a press briefing in Kuala Lumpur yesterday.

In Malaysia, CapitaMalls owns and operates three shopping complexes - Sungei Wang Plaza in Kuala Lumpur, The Mines in Seri Kembangan Selangor and Gurney Plaza in Penang.

An ideal portfolio is a mix of both existing properties and assets that it builds on its own. In Malaysia, the three malls provide a total nett lettable area of 1.9 million sq ft.

When asked about plans to develop a mall in I-City owned by I-Berhad as previously reported , Lim said "we have spoken to them. But we are not ready to announce anything."

As for plans to set up a real estate investment trust in Malaysia, it is still an option.

"It is our stated strategy that ultimately, the aim is to list in the market where we operate in," she added.

She, however, declined to provide any time frame as to when this could happen.

In 2008, it was reported that CapitaLand Ltd may delay the launch of its retail property trust in Malaysia in light of the market condition then.

The three properties in Malaysia were acquired at around RM1.8 billion and have collectively undergone a RM100 million spruce-up, adding retail space and asset enhancement.

Lim added that return on investment for the properties could take anything between 10 to 15 years.

Meanwhile, on the performance of the three malls, Lim expects a 5 per cent improvement over an earnings before interest and tax (EBIT) in the current financial year ending December 31 2010, similar to the anticipated growth in the Malaysian economy.

However, she did not discount the fact that growth for the year could be more.

The three malls posted an EBIT of S$50 million (RM118.5 million) last year and was the third best performing market for CapitalMalls after Singapore and China. CapitaMalls also operates in India and Japan.

Since its entry into Malaysia in end-2007, it has seen an improvement in net lettable area of 4.5 per cent to 1.87 million sq ft while retail rates have inched up 18.5 per cent.

The occupancy at all three malls are virtually full compared with the national average occupancy of Malaysian malls of some 75 per cent.

By Business Times