http://www.straitstimes.com/archive/...-land-20140422

A developer's keen eye for the lie of the land

Published on Apr 22, 2014 1:27 AM

By Lee Su Shyan Money Editor


MOST Singaporeans know of listed City Developments and its many condominiums around town but few probably realise just how long the owner Kwek Leng Beng has been at the top of his game.

CDL has been developing homes for the past 50 years and remains among the largest residential players here - no mean feat in a fiercely competitive sector that has seen many prominent players fall by the wayside.

One number alone tells the story of CDL's resilience and success: Nearly one in every five private homes sold last year was built by the firm and other private units of parent Hong Leong Group.

The company's ability to navigate the rough and smooth of Singapore's property market is largely down to its determination to stay ahead of its time. Long before expanding overseas was a buzzword, CDL was venturing abroad, snapping up hotels in Penang, Manila, Taipei, London and New York in the 1980s and 1990s.

The purchase of the Copthorne chain for £219 million in 1995 led to the launch of Millennium & Copthorne Hotels, which is now listed and the largest Asian-controlled hotel chain with about 120 properties across the world.

CDL was also the first company to sponsor a hospitality real estate investment trust (Reit) here; the CDL Hospitality Trusts' portfolio includes Orchard Hotel.

The firm is behind the Sail, the world's tallest residential property when it was launched in 2004 and still a landmark in the Marina Bay area. The group was also one of the first to champion green buildings, with its City Square Mall and other projects winning awards for being eco-friendly.

But while CDL has kept its title as one of the largest developers and commercial landlords in Singapore, it has a somewhat staid reputation. It remained focused on the Singapore market even as players such as CapitaLand and Keppel Land embarked on ambitious projects in China while SC Global oozed glitz and luxury with its upmarket developments.

But recent moves by CDL signal that it is ready to ramp it up.

In an interview after receiving the Real Estate Developers' Association of Singapore (Redas) Lifetime Achievement Award recently, Mr Kwek, 73, the firm's executive chairman, talked about his vision for the group. He told The Straits Times: "We need to bring fresh perspectives to a rapidly changing and increasingly competitive business landscape."

A new CEO

ONE change, and it is a big one, is to have a newly-created chief executive officer's post, and then to appoint someone from outside the firm - Australian Grant Kelley.

The 49-year-old has been given a tall order - to relook the entire operation and make the company more productive.

Mr Kwek likens the job to cutting "a document down from 50 pages to 20 without losing its essence". That refers not just to the property development business but the hotel business as well where good management can make or break the bottom line.

Mr Kwek admits: "The company needs to evolve and evolving takes place when there are new people on board."

He is confident Mr Kelley's private equity background with Apollo Global Management will enable him to lead the company in its revitalisation drive.

Overseas moves

BESIDES appointing a new CEO, the group, whose property projects have been practically all Singapore-based, is expanding overseas in a big way.

Times have changed. Once, investors would have just bought foreign shares, for example in Hong Kong-listed Sun Hung Kai, to get overseas exposure in property, but investors and analysts now prefer companies to develop property overseas for better dividends. The Singapore market is facing headwinds, analysts say, and foreign markets offer better returns.

And CDL is taking this feedback to heart.

Mr Kwek said: "We need to be less Singapore-centric in light of the current limited opportunities domestically... We want to build an international external wing." Mr Kelley, with his management and private equity experience, has the fresh outlook necessary to achieve that, Mr Kwek added.

CDL is making moves in Britain. Mr Kwek negotiated an attractive deal to buy 300 carpark spaces near Harrods in London's upscale Knightsbridge area. The aim is to get planning permission to develop an apartment block on the site. In February, CDL sealed a deal for a site in Croydon, an area that is being rejuvenated.

In China, the company should soon be able to see the results of its efforts over the past few years.

The 126-unit Eling Residences in Chongqing, and the Suzhou Hong Leong City Centre mixed development, on a 45,455 sq m site, will likely start selling in the second half of this year. Sales of Huang Huayan, a mixed-use project in Chongqing, will start next year.

On the China market, Mr Kwek said: "Urbanisation - everyone must have a home, why can't we feed into the urbanisation programme? I am confident of China but the process of getting our projects done or getting things done, take a longer time."

Closer to home, Mr Kwek is also keen on Australia, New Zealand and Japan. "We have been trying to expand overseas, starting with one platform in London, in New Zealand with property investments."

Succession planning

FAMILY members hold various roles in the diversified Hong Leong Group of more than 200 companies. The family members include Mr Kwek's nephew Vincent Yeo, 45, CEO of CDL Hospitality Trusts, and niece Patricia (Vincent's elder sister), who is group finance director at Hong Leong Investment Holdings.

Mr Kwek's son Sherman, 38, heads China operations and is also CDL's chief investment officer, and nephew Kwek Eik Sheng, 32, is the firm's newly-minted chief strategy officer. With both reporting to Mr Kelley, the question is whether this is the next step in grooming the younger generation.

Mr Kwek has worked under his own father, Hong Leong Group founder Kwek Hong Png, a man with a reputation for being a tough taskmaster.

Perhaps with that in mind, Mr Kwek said: "Of course it is difficult with children. Some may listen, depending on their character, but if they are intelligent, they will realise that they can learn many lessons.

"If a company owner has family members, some of whom are interested in working in the group, we would still need senior family members to mentor them, plus we need external people like Grant Kelley - to expose the younger ones to a much wider experience than what they can derive from within."

In any case, if anyone is asking, Mr Kwek is not ready to let go of the reins, stating for the record that he is not thinking of retiring.

He said: "I feel young at heart. I feel I can contribute to the business as well as to society. I've seen friends retire at 35 and are bored after two years of travelling around the world."

After all, aside from CDL and hotel unit M&C, Mr Kwek, from his 61st-storey penthouse office at Republic Plaza, has to oversee other Hong Leong Group entities.

These include Singapore's largest finance company Hong Leong Finance and Singapore Exchange- listed Hong Leong Asia, which makes more than two million fridges, freezers and air-conditioners a year for China and other markets.

Hong Leong Asia has an "international" bent too, with more than 80 per cent of its revenue derived from businesses outside Singapore, mostly in China. Hong Leong Asia's China Yuchai makes half a million diesel engines for trucks a year, for example. These companies are run by professional managers.

So until it is time to hang up his chairman's hat, Mr Kwek is sticking to some basic principles: "Don't over-leverage. Today I am in a very good position, many of my private companies have no borrowings, my listed ones have low borrowing, so if there is an opportunity, I have the firepower to go ahead fast."

Standard Chartered recently estimated that CDL could surprise with $3 billion worth of investments overseas.

Mr Kwek added: "I want the Hong Leong Group to be recognised as a major Singapore company, one that has spread its wings to the far corners of the world, doing Singapore proud."

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