KUALA LUMPUR: With the sluggish property market in Malaysia, it is not surprising to see local property players expanding their presence to other countries, notably Australia and the UK.
But stepping into another country means being exposed to foreign exchange (forex) risk. Revenues and expenses in that country are not denominated in ringgit and as such are subject to currency fluctuations. Thus, any weakening of that country’s currency could result in a lower revenue upon conversion into ringgit.
This is the situation now for Malaysian developers in Australia in the wake of the dropping Australian dollar. Another cause for concern is the slower property market Down Under.
Among Malaysian listed property developers undertaking projects in Australia, Mulpha International Bhd stands out when it comes to revenue contribution from that country. Some RM1.15 billion, or a whopping 97.92% of its total revenue, came from its Australian projects in 2017, according to the company’s annual report for that year.
Another property player, UEM Sunrise Bhd, saw RM963.89 million, or 33.2% of its total revenue contribution, come from Australia in 2017, according to its annual report.
But, as noted by AmInvestment Bank analyst Thong Pak Leng in a report last Thursday, UEM Sunrise had said there were no defaults on its Melbourne apartment projects Aurora and Conservatory, and it was on track to settle the units which had been handed over.
“Aurora is fully sold while Conservatory had a take-up rate of 96% as at end-December 2018,” said Thong.
As for other property developers such as S P Setia Bhd, Gamuda Bhd and Sime Darby Property Bhd, their Australian contributions are relatively minimal.
Kenanga Investment head of equity research Sarah Lim said that with the weakening Australian dollar, Malaysians could probably also consider buying properties there. This, she said, will boost the sales of Malaysian companies with projects in Australia, enabling them to clear their unsold units faster.
“The weakened Aussie dollar may actually encourage more people to buy [properties in Australia],” Lim told The Edge Financial Daily. “But for those who [have] already [booked properties there], the question is whether they are going to complete the sale.”
She explained that in Australia, buyers can pull out from a sale, adding that they would only do so if their total ringgit investment value has dropped by more than their initial deposit. They would not react badly to “short-term foreign exchange hiccups”.
From the developers’ standpoint, Lim said they are not as forex-sensitive in general because the completion of the project has a longer gestation period, resulting in the forex impact to be averaged out during the period.
“This could affect their cost, but this could average out year-on-year, because it takes about a minimum three to four years to complete one project,” said Lim, adding that the cost impact is difficult to see from a forex point of view and could only be seen when the project is completed.
“The cost impact on the forex is very hard to determine because you don’t know when the developers have brought in or taken out the money,” said Lim.
Furthermore, she noted that property developers are allowed to leave their money or earnings from their completed projects there to be deployed for their future investments, which means making them less sensitive to the volatility of the currency.
Affin Hwang Capital Research senior associate director Loong Chee Wei concurred, saying the weakening Australian dollar would not be much of a concern to property developers. He said the developers will focus on selling the remaining unsold units.
“They will be less aggressive in terms of launching new projects at this stage and will be focusing more on clearing the unsold inventory,” said Loong.
Nonetheless, he said the weaker Australian currency means that when earnings are translated into ringgit, they will be lower.
The more important impact, he said, would be if the developers could still sell the units or if the project itself is making good profits in Australian dollar. The completion of sales will be affected by the slower property market there as well as weaker selling prices, he added.
Opportunity to increase land bank?
The depreciating Australian dollar could also offer property developers the opportunity to increase their land bank down under.
Kenanga’s Lim stressed, however, that forex is not the “main decider” for developers to build on their land bank in Australia.
She noted that while Australia is seeing a slowdown in the property market, and in the Melbourne central business district, high-rise condominiums are mushrooming.
“So if they want to increase their land bank, the question is can they launch fast enough,” she said.
Additionally, she noted that developers, in general, do not store a lot of Australian land bank, and are “quite prudent” when it comes to land-banking there.
While buying land Down Under could be cheaper for property developers currently, Affin Hwang’s Loong said the developers will still be cautious about buying new land for development as cash flow is still a challenge.
He explained that the developers will complete the sale of their unsold units before looking for new land bank, unless their financial position is very strong. He added that most developers will reinvest their earnings collected from the completed projects.
“At this point, unless the property developers are doing really well in Malaysia — a lot of them are stuck with inventories here — wanting to put in new money in Australia is a challenge,” said Loong.
“Or if land prices drop so much, then it’s very opportunistic to buy it, and [provided that] the developers have a very strong balance sheet, which at this point, I don’t see many,” he added.
Likewise, RHB Research Institute Sdn Bhd senior analyst Loong Kok Wen said developers have to be really careful as the property market in Australia has slowed down and the Australian government has tightened rules for foreign property buyers, especially in restricting the mainland Chinese buyers.
“It is not easy just because the Aussie dollar is cheaper now. Property developers have to be careful given that there is a slowdown in the region,” she said.
The source: The Edge Markets
MONASH University, Australia’s largest university, launched their Global Immersion Guarantee (GIG) programme in Kuala Lumpur on Jan 9, as it welcomed the inaugural cohort of GIG students to Malaysia.
The GIG programme is a Monash University, Faculty of Arts initiative that offers a guaranteed, funded overseas placement for every Bachelor of Arts and Bachelor of Global Studies student.
The GIG programme will play a valuable role within Monash University’s broader engagement in Malaysia and the South-East Asia region. The initiative reaffirms Monash University’s commitment to ensuring that students graduate with a deep appreciation for Malaysia, its culture, dynamic business and innovation sector.
Monash University along with its partners aspires to mobilise a generation that is globally-focused, culturally conscious, creative, bold, and has the ability to work collaboratively for the advancement of Malaysia and Australia.
As part of the GIG programme, between November and February every year, students travel to one of four countries, including Malaysia, India, Indonesia, and Italy, for a two-week experience. When in Kuala Lumpur, students will engage with local leaders, businesses, NGOs, community and youth groups about innovative and sustainable solutions to address human impact on the environment.
In his welcoming speech, Australian High Commissioner Andrew Goledzinowski said he hoped the students would be excited to be part of the GIG programme in Malaysia.
“You came to Malaysia at a very important time. It is the most interesting time in Malaysian history as there was a historic change in the government,” said Goledzinowski.
“Although, we are different countries, we have some extraordinary parallels. We are both Commonwealth countries, we are multi-cultural, multi-ethnic, and we are both an open trading society,” he said.
During the two weeks stint, the students will explore a number of sustainability challenges that are confronting contemporary Malaysia. They will also learn about Penang’s heritage sustainability challenges.
Monash Malaysia’s president and Pro Vice-Chancellor Prof Andrew Walker, who spoke to theSun, said sustainability is a challenge all over the world.
He said the students made a trip to Carey Island, earlier that day, to look at sustainability from the perspective of the Mah Meri Orang Asli community.
“What we are interested in is how Malaysians preserve and protect nature in a very busy city like Kuala Lumpur,” he said, adding that the students would be exploring parks in Kuala Lumpur.
He said this would be the first time some of the students have travelled to Asia, adding that the programme would give them a real advantage in learning about new issues and perspectives.
Souce: The Sun Daily
KUALA LUMPUR: The Eco World group is targeting to achieve RM12bil worth of sales for its Malaysian and international operations over financial years 2019 and 2020.
For its financial year ended Oct 31, 2018 (FY18), local and international sales exceeded RM6bil.
Eco World Development Group Bhd (Eco World Malaysia) chairman Tan Sri Liew Kee Sin, the man behind the group, was in his element at the group’s FY18 results briefing. “Finally, we are making money in London. It has been a tough year (2018) but it has been a good year for us. We expect 2019 to be equally tough,” said Liew.
Moving away from year-to-year projections as is normally the case, Liew said he was stepping out of the ordinary to project collective sales over a combined two-year period for both Eco World Malaysia and Eco World International Bhd because of Brexit, the stamp duty issue in Australia and the current local climate.
“But we can do RM12bil through both companies over a two-year period,” he said, adding that he would like a 50:50 split bearing in mind that Britain’s built-to-rent (BtR) market would be Eco World International’s key growth driver.
Liew said the BtR market is a trillion-dollar business in the United States, but a million-dollar business in Britain.
“We want to help turn it into a billion-dollar business.”
Eco World International turned profitable in FY18 with RM35.5mil in profit after tax versus a loss of RM87.5mil a year ago.
It recorded total sales of RM3.3bil in FY18, above its set target of RM3bil and over 60% higher than the RM2bil achieved in FY17.
Eco World International’s share of unbilled sales to be carried forward to FY19 reached a record high of RM6.62bil. Although it has projects in Australia, Liew said the high points achieved by the company were due to Britain, where it is involved in open market sales for its three projects in London City Island, The Wardian and Embassy Gardens. However, it is the BtR segment that he is thrilled about.
Eco World International president/CEO Datuk Teow Leong Seng said: “Our decision to enter the extremely resilient Britain mid-mainstream market with its fast-growing BtR subsector has proven correct. We are indeed humbled to have managed to win the confidence of Invesco Real Estate, a global property investment management firm, for the sale of more than 1,000 BtR homes to one of its international separate account clients recently.
“At more than RM2bil in value, this sale is the largest BtR deal ever concluded in Britain – that it was achieved in less than six months after we completed our acquisition of 70% of the Willmott Dixon residential development business makes it especially notable,” Teow said.
Eco World London – Eco World International’s 70% joint venture with Willmott Dixon – already has existing sites with the potential to deliver over 3,000 BtR units, which the group intends to realise over the next two to three years. It aims to build a total of 10,000 BtR units over the longer term.
On the home front, Eco World Malaysia’s core profit after tax grew 46% from RM113.1mil in FY17 to RM165.6mil in FY18.
Its share of results from joint-ventures increased by RM86.3mil, from a loss of RM30.9mil in FY17 to a profit of RM55.4mil in FY18.
Despite cuts in marketing, overheads and administrative expenses, the company managed to achieve the same amount of sales, and this helped with the overall numbers.
Total sales form Malaysian projects exceeded RM3.1bil in FY18, with more than RM2.2bil achieved in the second-half of 2018. Its share of unbilled sales to be carried forward to FY19 stands at RM6.44bil, a record high for Eco World Malaysia.
Eco World Malaysia president/CEO Datuk Chang Khim Wah, said the company would be embarking on a new home ownership campaign in January 2019 called HOPE – Home Ownership Programme with Eco World.
It incorporates two innovative solutions to help customers own their homes and is targeted at owner-occupiers aged 40 years and below in search of a lifestyle, landscaped environment with amenities and digitally connected.
Source: The Star Malaysia
AVALON, Australia: AirAsia became the first airline to touch down at Melbourne’s newly opened international airport at Avalon on Wednesday (Dec 5) morning.
It also marked the launch of the first international service by the low-cost carrier to and from Victoria’s second airport, located 40km southwest of Melbourne.
With the start of flights to Avalon Airport, AirAsia will cease operating from the city's main airport at Tullamarine.
AirAsia X Malaysia CEO Benyamin Ismail said the inaugural flight to Avalon sealed a 10-year deal between the airline and Melbourne’s Avalon Airport, built with an about RM150 million (US$36 million) investment by the airport operator and the Australian and Victorian governments near the City of Geelong.
Operated by AirAsia’s long-haul affiliate, AirAsia X, Flight D7218 touched down at 8.20am local time with an 80 per cent load factor.
“This purpose-built no-frills facility has today become one of the most important international hubs AirAsia flies to outside of Southeast Asia,” Benyamin said.
He added the airline aims to fly 500,000 passengers annually via this route.
"AirAsia will operate 28 flights per week between Kuala Lumpur and Melbourne Avalon. We aim to increase our load factor from 80 per cent (at Melbourne Tullamarine Airport) to 85 per cent via this new airport next year, " he said.
According to Benyamin, the long-term deal provides lower operating costs for AirAsia, will increase passenger volumes, non-aeronautical revenue for Avalon Airport and ultimately an opportunity for millions of people to fly affordably.
"AirAsia guests who fly to Melbourne Avalon will benefit from a range of ‘Avalon Advantages’ including cheaper parking, no Tullamarine freeway tolls, convenient access to Melbourne city centre via SkyBus, new airport infrastructure and a hassle-free arrival and departure process,” he added.
He said the airline also plans to fly to Avalon from Bangkok and Bali in the near future.
Also present at the launch were Australian High Commissioner to Malaysia Andrew Goledzinowski AM, Group CEO AirAsia X, Nadda Buranasiri, Executive Chairman Linfox Airports, David Fox and CEO Avalon Airport, Justin Giddings.
To celebrate the inaugural flight, AirAsia has launched a Welcome to Melbourne Avalon Sale with promotional fares (until Dec 9) starting from RM499 each way between Melbourne Avalon/Kuala Lumpur and Kuala Lumpur/Melbourne Avalon for travel now through to May 2019.
In Australia, AirAsia also operates services between Kuala Lumpur and Perth, Sydney and the Gold Coast.
Source: Channel News Asia
Australia has today ratified the Trans-Pacific Partnership (TPP-11) trade agreement giving our farmers access to more markets, greater opportunities for our businesses, more jobs and increased investment.
Australia is the sixth country to ratify the agreement, meaning it can now enter into force on 30 December this year. We join Canada, Japan, Mexico, New Zealand and Singapore as part of the first group to ratify.
Our ratification means we are guaranteeing maximum benefits for our farmers and businesses, with the bonus of two tariff reductions within 3 days - one on 30 December and another on 1 January 2019.
The TPP-11 is one of the most comprehensive and ambitious trade agreements in Australia’s recent history. It will help support Australian businesses to grow and see annual benefits of up to $15.6 billion to our national economy by 2030.
Australian farmers and businesses will particularly benefit from new high-quality free trade agreements with Canada and Mexico, our first ever with these two of the world’s top 20 economies.
For example, the Agreement will provide new access to the Canadian market for our grains, sugar and beef exporters. It will open up the growing Mexican market for our pork, wheat, sugar, barley and horticulture producers.
Australian exporters of industrial products such as iron and steel, leather and paper products and medical equipment, who currently sell $19 billion worth of products to TPP-11 markets, will be able to grow their businesses without facing a tariff disadvantage.
The TPP-11 also improves our market access into Japan for our beef, wheat, barley and dairy exporters beyond the bilateral Japan-Australia Economic Partnership Agreement.
It’s hard to believe Labor would have walked away when the US walked out on the TPP rather than staying and getting the best possible deal for our farmers and businesses.
More concerning is that in recent weeks we’ve also seen Labor yield to union demanded policies on trade that will substantially weaken if not completely eliminate the capacity of any future Labor government to get better market access for our exporting farmers and businesses.
Our Government’s record speaks for itself and only we can be trusted to deliver agreements that open new markets for Australian exporters, create certainty for Australian businesses, strengthen our economy and create more jobs.
Source: Australia's Department of Foreign Affairs and Trade
KUALA LUMPUR: Top business leaders in Malaysia are optimistic of their operating environment and the nation’s economic prospects, according to a recent survey by Monash University Malaysia and CPA Australia.
Respondents, who comprised 416 chief executive officers (CEOs) and senior managers, also viewed the global economic environment as moving forward towards greater stability.
However, the trade war rhetoric between US and its major trading partners remains a cause of concern, as a full-scale trade war will dampen global growth and business sentiment in the region and Malaysia.
The “Business Sentiment 2018” survey said to mitigate these risks, Malaysian firms are intensifying their market opportunities within the domestic economy and expanding their operations in Asean and other Asia Pacific markets.
Their optimism, according to the survey, is attributed to the various government policies and strategies to increase disposable income of consumers via lower taxes, removal of tolls on road use and increased spending on major infrastructure development.
“Strong performance of firms is also attributed to greater adoption of digital technology and the transition towards business models underpinned by Industry 4.0.
“Interestingly, small and medium sized firms are embracing these technological developments quicker than large firms. Hence, these technologies are enabling the small and medium sized firms to be more agile and adaptive to the changes taking place in the global economy,” it added.
The respondents also proposed several initiatives to nurture and sustain a sound, agile and resilient national innovation ecosystem.
These include increasing the supply of creative talent to enable firms to enhance process improvements, product development and expand market reach.
They also called for strengthening the engagement between universities, industry and government to ensure educational programmes, training initiatives and R&D activities continuously raise the innovative capacity of firms.
Respondents said greater incentives are needed for SMEs to access technology, expertise, R&D and other business support to facilitate their move up the innovation value chain.
Source: New Straits Times
KUALA LUMPUR: The new Malaysian government has the right to review what the previous government had signed up to in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), said the deputy high commissioner of Australia Michael Growder.
“We are all very supportive of that. Many other governments will do the same thing and it is not something (that) we have any problem with at all,” Growder said during a discussion on CPTPP here today.
“We of course hope that they (Malaysian government) would see fit to ratify (the CPTPP) as they go through with the ratification process,” he added.
Meanwhile, the high commissioner of Canada Julia Bentley, who is also one of the panelist for the event, believes that Malaysia’s top exports would benefit from the free trade agreement, which include the country’s exports of palm oil, rubber and electronic products.
“These (exports) would benefit from the tariffs reduction,” Bentley said.
The event, which is aimed to discuss the importance and benefits of CPTPP, is jointly organised by three chamber of commerce, namely the Malaysia Canada Business Council (MCBC), Malaysian Australian Business Council (MABC) and the Japanese Chamber of Trade and Industry Malaysia (JACTIM).
To date, Mexico, Japan and Singapore have ratified the CPTPP, with Australia and Chile to follow suit by year-end.
Source: The Sun Daily
PETALING JAYA: The composition of the committee set up to review Lynas Corporation’s rare earth project in Gebeng, Kuantan, are among factors critical in ensuring the nation’s reputation as a stable and open investment destination, says the Malaysia-Australia Business Council (MABC).
“The credibility of the review, which includes the composition of the review team and the terms of reference, is critical to ensure that it does not damage Malaysia’s reputation as a stable and open investment destination,” the council said in a statement here yesterday.
While the council acknowledged and did not dispute the government’s right to conduct a review of the operations, it said the review should be to assess any breaches of licences or for not meeting acceptable international standards.
“In the interests of maintaining investors’ confidence, any review into Lynas Malaysia should be public, transparent, objective and evidence-based,” the council said.
“The company should be provided with the opportunity to defend publicly its regulatory and environmental record since it commenced operations in 2012.”
The statement by MABC follows the council’s concerns over recent reports about a review of the operations of Lynas Malaysia, which has been producing high quality rare earth materials in Kuantan under extensive licensing conditions since September 2014.
“Malaysia has long been regarded as an attractive investment destination,” it said.
“This is because of the reliable legal framework; predictable economic and political environment; and openness to investment.”
MABC noted that Australian businesses had invested almost RM30bil in Malaysia as of end 2017 in several sectors including manufacturing, services, agribusiness, resources and the digital economy.
Last month, the Energy, Science, Technology, Environment and Climate Change Ministry announced that it would be setting up a committee to review Lynas’ operations.
Deputy Minister in the Prime Minister’s Department Fuziah Salleh was appointed the chairman.
Her appointment to lead the review committee had raised concerns among several parties.
Source: The Star Online
KUANTAN: Australian High Commissioner to Malaysia, Andrew Goledzinowski believed that Lynas Advanced Materials Plant (Lynas) in Gebeng should not be shut down as it has contributed a lot in terms of providing jobs and improving the local economy.
Describing it as a tragedy if Lynas was to cease operation, he said many people would lose their jobs and Pahang's reputation as an investment-friendly state would also be affected.
Goledzinowski said Lynas has created about 600 jobs, not including thousand others that were indirectly involved with the Gebeng plant.
“I want to make sure that Lynas continues to grow and creates more jobs for Malaysians. I don't think Lynas will close down or else it will be a tragedy....people will then say politics is more important than science.
“Lynas is a pioneer in Malaysia and its success story will inspire other companies from Australia to come here.
"Once a company is successful then the others will show interest. But if one fails, then everyone else will know about it... In fact, we have another business investment coming from Australia this week,” he told reporters after a high-tea session with Lynas management staff and village headman from Beserah here.
Goledzinowski was commenting on the recent news report about a review on Lynas' operation set to be carried out by a committee under the Pakatan Harapan government.
The Energy, Green Technology, Science, Climate Change and Environment Ministry had recently identified the rare earth refinery plant as one of several "environmentally risky" projects which needed a review.
He said during a recent meeting, Energy, Green Technology, Science, Climate Change and Environment Minister Yeo Bee Yin had given her assurance that any decision made by the government would be based on facts and evidences.
He said Yeo had also relayed her intention to visit Lynas in October for a briefing and that he was looking forward to it.
“To date, Lynas is the most reviewed and investigated plant in Malaysia and I do not think that another review will be a problem as long as it is factually supported.
"It is the rights of the new government to do a review (on Lynas) and Lynas has to take part in it.
“On my side, I hope the media and public will be able to be given access to what is happening as it will not only assure transparency but also raise awareness about Lynas and its activities.
"(After all) Lynas is one of Australia’s most vital business in Malaysia,” he said.
It was reported that Deputy Minister in the Prime Minister’s Department Fuziah Salleh, who is also the Kuantan member of parliament and Bentong member of parliament Wong Tack would be leading a committee set up to review the Lynas project.
In his speech earlier, Goledzinowski said the rare earth mineral could only be obtained in China and Pahang and if Lynas was to close down, technology producers in the United States and Japan will have to solely depend on China.
Lendlease's first big step on the road to becoming a global powerhouse started when it decided to shrink.
A decade ago, the 68-year old company, founded by Dutch immigrant Dick Dusseldorp, that had made its name building the Snowy Hydro and the Sydney Opera House, was operating in 40 countries but only four of them were profitable.
In the tough years after the global financial crisis, the new chief executive, Steve McCann, rationalised its global operations to a new set of international "gateway cities" where it was willing to invest.
Sydney's giant Barangaroo project was the first big step in a new direction towards landmark urban regeneration projects; Lendlease won the tender in 2009, and it was a big risk for the new boss.
"Steve took a big bet," recalls Tony Lombardo, the company's former head of strategy who now heads up its Asia division.
"People were worried about the debt. It became the calling card for what we wanted to stand for in urban generation. This is going to be built in our back yard. Sydney is our home city. We thought that was the great opportunity."
Today, LendLease has a list of 16 landmark regeneration projects across 10 countries, and the group has expanded well beyond its construction roots to become an investment giant worth $11.5 billion, employing 13,000 people and deploying a $71 billion development pipeline.
In a series starting on Monday,The Australian Financial Review is examining how Lendlease became the world's developer, as part of an ongoing focus on Australian businesses going global.
"We said to ourselves, you know what, we have to go after these bigger projects where we believed we could create a different place," Lombardo says.
"Lendlease lost money internationally previously. The board could at the time have retreated completely but it held its nerve and said you can't just be a player in Australia," Lombardo says.
The company also plans to reduce the amount of capital it invests in Australia and push it out to the rest of the world with the focus on its core operations in Europe, the Americas and Asia.
Lendlease chief Steve McCann says the company hoped to generate up to 20 per cent of total profits from the world's fastest-growing economies by reinventing the way people work, live and spend their leisure time in high-density cities while branching out into new businesses underpinned by ageing populations.
"Capital is increasingly deployed in our international projects, where we believe there is strong embedded margin," McCann says.
"The regional shifts in capital are in line with our expectations, highlighting our origination focus in recent years on international gateway cities."
In the group's latest results operating EBITDA margin out of Asia jumped to $97 million for the financial year 2018 up from $21 million the previous year.
Bringing Barangaroo to Asia
Singapore's Paya Lebar Quarter, the company's flagship project in the region is a city precinct of three office towers, residential apartments, shops, restaurants and lots of green space. It is six metro stops from Raffles Hotel and about the same distance away from the city's airport.
This is the kind of project Lendlease is holding up as a model for the region as it pursues urban regeneration projects in "gateway cities" around the world.
On site in Singapore, Lombardo gazes over a sea of cranes, scaffolding and half-completed high-rises as he relays the story of Lendlease's mixed fortunes offshore.
Lombardo has big plans for the world's most populous region as the company works with local governments to shake up the way major residential and commercial developments are built and operated.
As well as bringing Barangaroo-style developments to cities like Singapore and Kuala Lumpur, the company want to be a major player in China's fledgling aged care market.
"We have been fixated this time round on making sure you get a competitive advantage. Don't be a one-trick pony in construction which is where we were sitting previously.
"The next three to five years across Asia, the opportunity is there. We just have to make sure we can do it safely and profitably."
Sydney's Barangaroo is the role model, which meant Lendlease needed to convince the Singapore authorities to rethink the way a mixed-use development works.
Lombardo compares it to the "party people don't want to leave" – a liveable and active space like Barangaroo where people work on laptops in ground floor cafes, families picnic on the weekend and is just as busy in the evening as during office hours.
Lendlease convinced the Singapore government to combine three plots of land which would have been sold separately into a precinct with more community space than was normal for developments in the small city state.
Lendlease also proposed covering up the concrete canals running through the site, which are generally left open in Singapore, to free up 100,000 square metres of public space. It was a radical proposal and one of the biggest property transactions in Singapore at the time.
It will be the first development in the city to offer "end of trip facilities" such as showers and towels for people who want to run or cycle to work, bike parking and facilities for electric scooters. This is something the Singaporean government is now mandating in other big projects.
Lendlease will move its Asian headquarters, currently in a high-rise down town where its staff are trialling a co-working concept it will offer to tenants at the new site, early in the new year.
Lombardo, who outlines his plans over two interviews in Singapore and in Shanghai, is confident Asia will eventually account for one-fifth of the company's global profits to match the capital being allocated into its operations spanning China, Singapore, Malaysia and Japan. This is a big leap from 3 per cent in the first half of the current financial year.
"We are putting 15 to 20 per cent of the capital [in] so over time profits should get into that zone. It takes time because developments take three to four years to build before you get to recognise profits at the end. It takes time to build up a consistent portfolio and generate those returns."
The Paya Lebar Quarter, a 30:70 joint venture with the Abu Dhabi Investment Authority, is the company's flagship project in Asia. Like its other big projects, Lendlease buys and develops a site, brings in a buyer and then takes a long-term operational role.
Offices are offices no longer
Lombardo says this long-term approach is an incentive to create a good quality asset from the beginning. Technology, co-working and the shared economy play a big part in its projects. The site also sits on two train lines while covered paths and cycleways connect it to other parts of the city.
Lombardo says office buildings operate completely differently now than they did a decade ago. An office lobby used to be an empty space but now contains a coffee shop and places to meet.
Residents and workers do not drive to work and are more likely to run or cycle to work, even in Singapore's stifling heat, if there are the right facilities.
Technology is blurring the lines between where people live, eat, shop, exercise and work. The company is targeting medium to small companies who want co-working spaces as tenants.
"When we look for a certain site it has to be an attractive place to live, work and spend leisure time in parts of the city that are getting renewed or re-rated," David Hutton, the company's head of development says.
Lendlease rarely takes on projects in the middle of cities, but focuses on growth areas.
"What we try and do is get enough area and scale in a part of the city to get it re-rated and improved and we can contribute to that."
The property business is a long-term game but Lendlease has the luxury in Asia of being able to build major projects faster than it can in Australia, although this also creates huge challenges.
It uses cutting edge technology such as drones, 3D modelling, laser scanning and virtual reality to improve the planning process as well as safety.
"Hard to believe I came here from Australia with coloured drawings and pencils three years ago," says Andy Bartal, the senior site manager for the Paya Lebar site.
He marvels at the project started in 2015. He says 2000 construction workers putting in six days a week and 10 million man hours means the project will be finished early next year.
The challenge for Lendlease was building the office, retail and residential components all at once rather than a staged process.
There are cultural challenges too managing a workforce where only 10 per cent are trained in the construction industry.
Lendlease set up a training academy to improve safety. Building alongside a working metro system and with height restrictions which meant its cranes could not go above 64 metres was also challenging.
An aged-care vision for China
The long-term vision is for a large aged care business in China, the core property construction business in cities such as Singapore and Malaysia and a telecommunications tower operation in Japan.
He wants three to four major projects underway consistently at any one time compared to the two main projects it has now.
"In Asia, there are so many young cities and the urban centres are growing. It is most efficient to build up from a scale perspective because you get a better return out of the transportation and infrastructure."
New cities springing up in China, Malaysia's relatively young population and Singapore's more developed economy are major drawcards. Lendlease also operates in Tokyo.
You get a sense Lombardo is hungry to take the model to other cities but there are no formal plans to expand out of its four key markets yet, at least none that have made it past the board.
Lendlease has around $800 million, or around 12 per cent of group capital currently deployed in Asia.
That includes $500 million in development capital and $300 million in existing assets. The company plans to invest another $500 million to $600 million in equity, add debt and bring in investors for Asia.
Lombardo says he would like to double the size of its existing $6.2 billion portfolio in the region, while growing its funds under management to $10-$15 billion. The company currently has around $6 billion of funds under management.
"I would like to see the scale of that portfolio double in size because it means we have more sustainable platforms. It means we need to win a couple of big urban regeneration deals. I would like to grow our funds platform," he says.
The existing $6.2 billion pipeline includes the $3.4 billion end vale for the Paya Lebar Quarter and $2.9 billion for the Tun Razak Exchange (TRX) – a shopping mall and development in Kuala Lumpur.
Source: Financial Review
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