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The Industrial Parks business performed well in
2010. Its turnover for 2010 grew 7% to S$19.7 million,
compared to S$18.5 million in 2009. Turnover from
integrated townships and industrial parks owned and
under management amounted to approximately
S$450 million, 18% higher than their 2009 turnover
of S$380 million. The business’ net profit in 2010
grew 30% to S$36.9 million, compared to S$28.3
million in 2009, while profit from operations (PFO)
increased 19% from S$34.1 million to S$40.4 million.
The business’ improved performance was driven by
healthy take-up for commercial and residential land
in its Vietnam Singapore Industrial Park (VSIP) project
in Binh Duong, strong industrial land sales in VSIP
Bac Ninh, as well as improved contribution from the
business’ associate, Gallant Venture.
In 2010, our Industrial Parks business maintained
its focus on building its land bank and developing its
industrial parks and integrated townships in Vietnam
and China, where its projects cover a total gross land
area of 6,687 hectares. With more than 20 years of
experience in undertaking the development of raw
land, including land resettlement and infrastructure
development, the business takes an integrated
approach to township development, designing self-sufficient
sites that provide world-class industrial,
commercial and residential space with an emphasis on
sustainable urban development. In 2010, the business
sold a total of 183 hectares of land, with a remaining
2,700 hectares of land available for sale in Vietnam and
China to support future growth.
Based on current master plans, the business’ six
developments in Vietnam and China offer more than
12 million square metres of commercial and residential
gross floor area to third party property developers for
the development of building clusters for direct sale or
lease. Going forward, in order to maximise the yield
from our land bank, we also intend to undertake the
selective development of commercial and residential
real estate at choice sites within our land bank.
Significant progress was made during the year in terms
of land resettlement and infrastructure development.
Within VSIP Binh Duong, our second VSIP project
in southern Vietnam, we resettled 30 hectares of
land during the year, leaving only 20 hectares of the project’s total gross land area of 2,045 hectares to be
resettled in 2011. We also completed the preparation
and infrastructure development of 44 hectares of
industrial land and 96 hectares of residential land.
Profits from the sale of 36 hectares of industrial land
and 62 hectares of commercial and residential land
were realised. These sales have brought VSIP Binh
Duong’s take-up rate to 24% of saleable land, with
1,060 hectares of saleable land remaining available.
While almost all 500 hectares of the nearby VSIP I
are fully committed, the development continues to
provide steady recurrent income from factory rentals
and electricity distribution. The two VSIP projects in
southern Vietnam now have a total of 404 committed
customers, compared to 382 customers in 2009.
In northern Vietnam, while no additional
resettlement was done in VSIP Bac Ninh during the
year, effort was instead focused on land preparation.
We completed land preparation for 120 hectares,
enabling several customers to begin construction
of their factories, including Foster Electric Company
and Mapletree Logistics. Profits from the sale of
54 hectares of industrial land were realised, bringing
the take-up rate to 20% of saleable land, with a total
of 350 hectares saleable land remaining. VSIP Bac Ninh
now has 30 committed customers compared to 21 in
2009, including PepsiCo, which took up 12 hectares of
industrial land during the year to construct its second
largest beverage production facility in Southeast
Asia. We will progressively resettle the remaining
228 hectares out of the 700 hectare project gross
land area over the next two years in tandem with
customer demand.
The Industrial Parks business also stepped up its
successful presence in the country with the
groundbreaking for its fourth VSIP development in Hai
Phong, northern Vietnam, which was witnessed by the
Prime Ministers of Vietnam and Singapore. Located
in Hai Phong City’s new waterfront district in the
vicinity of the North Cam River area, the 1,600 hectare
integrated township has a planned 1,100 hectares
allocated for commercial and residential development
and 500 hectares allocated for a business and industrial
park. A highlight of the site, which has 920 hectares
of land available for sale, is a four kilometre stretch of
waterfront land along the river, with additional water
frontage along river tributaries within the site.
To date, VSIP Hai Phong has received the investment licence for 611 hectares of industrial land and the
business expects to receive an additional investment
licence for a further 137 hectares of commercial and
residential land in 2011. During the year, land resettlement
was completed for 250 out of the 611 hectares. In
addition, land preparation commenced for the arterial
boulevards within the resettled land. Piling works were
also completed for five detached ready-built factories
of 2,000 square metres each to be completed in 2011.
In 2010, several new developments were launched
in the Wuxi-Singapore Industrial Park (WSIP), including
a mixed-use commercial and residential building, a
business and information technology park and the
’Solar City’ photovoltaic park. The launches were
well-received with a healthy take-up for land and
units released for sale.
The development of the mixed-use commercial
and residential building as well as the business and
information technology park marked a first for
the business, as it leveraged on opportunities
available to participate in the selective development
of commercial and residential real estate to enhance
returns on land in choice sites. The business and
information technology park, a joint venture with
Hong Kong-listed First Shanghai Group, offers a total
99,000 square metres of gross floor area. Since the soft
launch of the development’s first phase in June 2010,
38% of its gross floor area has been taken up.
Meanwhile, the business also saw the soft launch
in October of its mixed development, ’International
Garden City’, comprising a 120-room serviced
apartment block owned by WSIP and operated
by Modena Residence, which is under the Frasers
Hospitality Group. The soft launch of two apartment
blocks of 177 units totalling 17,000 square metres gross
floor area saw an encouraging response, with 92 units
covering a total of 52% of gross floor area sold.
Another development which saw encouraging
take-up was the ’Solar City’ photovoltaic park, a
collaboration between Suntech Power and the Wuxi
New District with a planned area of 400 hectares.
40 hectares of land belonging to WSIP will be used
for the project’s first phase. Of these 40 hectares,
25 hectares have been taken up.
To date, WSIP is almost fully taken up, with a mere
15 hectares’ remaining saleable land. During the year, WSIP secured a 12 hectare plot of land in the
Wuxi New District’s Hongshan area for the planned
development of Hongshan Mansion, a 120,000 square
metre gross floor residential development with a total
of 700 units. To be developed over five phases, the
initial phase to be completed by the third quarter of
2011 will comprise 30,200 square metres or 156 units
of apartments and villas.
Meanwhile in September, the Industrial Parks
business increased our shareholding in the Singapore
consortium involved in the Sino-Singapore Nanjing
Eco High-tech Island (SNEI) from 30% to 43%. This
increased our effective stake in the Singapore-China
joint venture SNEI project from 15% to 21.5%.
During the year, the conceptual master plan for the
entire 1,500 hectare development was finalised and
approved, and plans are currently underway to appoint
an urban planner for the development of 630 hectares
with the remaining 870 hectares set aside under the
master plan for eco-tourism. Situated a mere
6.5 kilometres from Nanjing’s city centre on
Jiangxinzhou, the SNEI is Nanjing City’s largest foreign
collaborative development to date. The project is
expected to yield up to 3.2 million square metres of
office and commercial space and about 2.2 million
square metres of residential gross floor area. To date,
it has 360 hectares of land available for sale.
In September, Temasek Holdings, through its
wholly-owned company Singapore-Sichuan Investment
Holdings, signed a memorandum of understanding
with the Chengdu High-tech Zone Administration
Commission to explore the joint development of the
1,000 hectare Singapore-Sichuan High-tech Innovation
Park in Chengdu, Sichuan province. Sembcorp leads
the Singapore consortium currently undertaking a
feasibility study for the project, which is expected to
be completed by mid-2011. Should the outcome of the
study be favourable, a 50:50 Singapore-Chinese joint
venture will be formed to undertake the project.
In 2010, our 23.9%-owned associate company
Gallant Venture (GV) turned around from a net loss
position. The improved performance was mainly due
to the commencement of transfer of land titles in
2010 by GV’s property development business, which
recognised S$33.3 million of resort land sales.
In its World Urbanisation Prospects report released
in 2009, the United Nations states that it expects
urbanisation in Asia to continue at an unprecedented
pace, with the projected creation of an estimated
90 new cities over the next 15 years. Asia’s emerging
middle class is expected to grow significantly, in terms
of both size as well as spending power.
Against this background, we see significant
opportunities for our Industrial Parks business,
which delivers the economic engine to drive inward
investments, job creation, growth in exports and fiscal
revenues core to the economic growth of these fast-developing
Asian economies through our industrial
parks and integrated townships. The continued pace
of industrialisation and urban population growth is
also expected to increase demand for commercial
and residential real estate, which is set to benefit
the business, with its plans to undertake selective
development of commercial and residential real estate
at choice sites in its land bank.
In Vietnam, we expect VSIP Hai Phong to
start contributing to our net profit in 2011. While
its competitiveness may be somewhat affected by
higher national wage levels as a result of economic
growth, Vietnam’s market is nonetheless expected
to remain attractive to foreign investors given the
country’s increasing level of domestic consumption.
In China, the government’s implementation
of tightened credit controls and market cooling
measures is expected to result in a slowdown in
property demand, particularly in first-tier cities.
Nonetheless, second-tier cities such as Nanjing and
Wuxi, where our business operates, are expected to
remain relatively attractive given their lesser degree
of market saturation and lower business costs. With
the population of second-tier cities expected to rise
and per capita income for their growing middle class
expected to increase, the housing market in second-tier
cities is likely to still see growth. Furthermore,
the anticipated relaxation of China’s hukou, or
household registration system, is also expected to
result in an influx of first-time home buyers who may
be attracted to second-tier cities with their continued
growth and lower level of congestion. Against this
background, we expect to see continued contributions
from our residential and commercial developments in
WSIP and from land sales in SNEI.
Meanwhile, Indonesia continues to be an increasingly
attractive destination for foreign investments. We
expect our associate GV’s resort land sales to continue
in 2011. |
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