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Sembcorp’s Integrated Urban Development
business (formerly known as Industrial Parks) turned
in a good performance in 2011. Net profit grew
5% to S$38.7 million, compared to S$36.9 million
in 2010, while profit from operations (PFO) increased
14% from S$40.4 million to S$46.1 million. The
business benefited from strong land sales in the
Vietnam Singapore Industrial Park (VSIP) projects,
which registered a 30% growth compared to 2010.
Meanwhile, the Wuxi-Singapore Industrial Park (WSIP)
continued to see a steady income stream from factory
rentals as well as contribution from residential sales.
In 2011, the business sold a total of 226 hectares
of land in Vietnam and China, a 24% increase from
the previous year’s 182 hectares. Industrial land comprised 77% of land sales while commercial and residential land accounted for 23%. The growth in land sales was achieved in spite of a weaker global economic sentiment in the second half of the year. First land sales for both VSIP Hai Phong in Vietnam and the Sino-Singapore Nanjing Eco Hi-tech Island (SNEI) in China were secured during the year.
In early 2012, the business was renamed Integrated Urban Development, in line with our focus
on providing integrated urban solutions. Taking an
integrated approach to delivering urban work and
living environments, we have more than 20 years of
track record transforming raw land into large scale
urban developments comprising industrial parks as
well as business, commercial and residential space.
We also have the ability to extract further value by
undertaking selective development of commercial
and residential real estate at choice sites.
2011 has been a challenging year for Vietnam.
The country’s economy expanded 5.9% for the full
year, down from an average of 7% in the past
decade as the government tightened fiscal and
monetary policies to rein in high inflation. Despite
the challenging business environment, our VSIP
projects performed well, securing high value land
sales from several big multinational corporations.
For the year, VSIP sold a total of 212 hectares, an
increase of 30% from 2010’s 163 hectares. Demand
for industrial land continued to be strong, accounting
for 82% of the sales and growing 73% from the
previous year.
In southern Vietnam, our VSIP projects delivered
a steady performance, surpassing the previous year’s
land sales performance and accounting for 58% of
VSIP’s total land sales. Our first 500-hectare VSIP
project in Thuan An district is almost sold out and
contributes steady recurrent income from factory
rentals and electricity distribution. The second
2,045-hectare VSIP in the New Binh Duong Township
is 38% taken up and continues to see interest from
potential investors. 68 hectares of land have been
committed by customers and another 873 hectares
of saleable land remained available as at end 2011.
In northern Vietnam, the 700-hectare VSIP Bac
Ninh continued to build on its momentum of
securing well-established, long-term customers.
Nokia is setting up its first manufacturing facility in
Southeast Asia in VSIP Bac Ninh, joining PepsiCo and
Foster Electric. The integrated urban development
also attracted Malaysia’s SP Setia who took up a large
plot of residential land for an eco housing project.
VSIP Bac Ninh sold 64 hectares of land in 2011 and
total land take-up stood at 64% as at end 2011.
Investor interest remained healthy with 103 hectares
of land committed by potential investors and 142
hectares of saleable land remaining available as at
end 2011. Meanwhile, land preparation and
infrastructure works continued to progress for our
fourth VSIP project in Hai Phong City. During the
year, it achieved its first land sales to Kyocera Mita
Corporation of Japan. The official inclusion of Hai
Phong City in the Dinh Vu-Cat Hai Economic Zone
is expected to further boost the attractiveness and
marketability of the development.
Following the successful progress of our first four
VSIP projects, a memorandum of understanding was
signed with the People’s Committee of Quang Ngai
province during the year to explore the feasibility
of a 1,020-hectare integrated urban development
in central Vietnam. The proposed development will
comprise a 500-hectare industrial park located within
the Dung Quat Economic Zone, where government-supported
special economic zone incentives will be
made available to manufacturers. Separately, 520
hectares of land are expected to be zoned for
commercial and residential purposes near downtown
Quang Ngai city. The signing was witnessed by the
President of Vietnam His Excellency Truong Tan Sang
and Singapore Prime Minister Lee Hsien Loong.
In 2011, WSIP performed well despite being
a mature industrial park that has been operating
for 18 years. Rentals from ready-built factories and
electricity distribution continue to provide a stable
income stream while initiatives to enhance the yield
on this project have progressed well. During the year,
we completed and handed over a 140,000-square
metre custom-built factory to New York Stock
Exchange-listed Suntech Power, which will rent
the premises under a long-term lease agreement.
Five new ready-built factories have also been rented
out, including those in the Solar City photovoltaic
park. In the commercial and residential space,
occupancy rates for the business and technology
park improved from 38% to 50%. Good take-up
was also registered for the International Garden City apartment project in Wuxi New District, which sold
137 units during the year, 50% more compared
to 2010. Construction of Hongshan Mansion, a
108-unit residential development, progressed well
during the year and is targeted to be launched in
the second quarter of 2012.
Over in Nanjing, the SNEI project has completed
its urban master plan, industry positioning study
and ecology planning system. Of the island’s
1,500-hectare gross land area, 809 hectares will be
preserved for eco-tourism, while 715 hectares will be developed which includes 324 hectares of office,
commercial and residential land available for sale.
Through our joint venture company, we have secured
a 13-hectare site to develop the first major mixed-use
development on the island named New One North.
Encompassing a research and development park,
an exhibition centre and a waterfront commercial-leisure-residential precinct overlooking Hexi New
City on Nanjing mainland, New One North will yield
about 152,000 square metres in gross floor area.
During the year, we also completed the feasibility
study for a new integrated development, the
Singapore-Sichuan Hi-tech Innovation Park.
Strategically located in Chengdu’s Tianfu New City
central business district, the project adds 500
hectares to our land bank available for sale. The
integrated development will focus on attracting
innovative and knowledge-intensive industries in
eight clusters comprising information technology,
digital media, pharmaceutical research, precision
engineering, environmental services, service
outsourcing, banking and insurance, and will be
developed by a joint venture between the Singapore
consortium, in which Sembcorp has a 50% stake,
and its Chinese partners.
Our 23.92%-owned associate company Gallant
Venture continued to deliver positive results although
its profit contribution in 2011 was lower compared
to 2010. Its property development business registered
lower resort land sales while the industrial parks
business continued to face competitive pressure.
The Integrated Urban Development business
is expected to deliver better performance in 2012
compared to 2011, in anticipation of contribution
from the SNEI project and underpinned by 227
hectares of land commitments. Our projects in
Vietnam and China remain attractive destinations
for foreign investors. However, the economic downturn in Europe and the USA may slow down
manufacturing exports and delay potential customer
investment decisions that could in turn impact the
pace of our land sales. The Vietnamese and Chinese
governments’ measures to stabilise the housing
market in their countries may also moderate the
demand for commercial and residential space.
In the longer term, industrialisation and
urbanisation remain a core priority for both Vietnam
and China. The Vietnamese government has set
a target to achieve full industrialisation by 2020.
Its urban population is expected to reach 59% in
2050 from 30% in 20091. Similarly, China’s economic
and social priorities are moving towards industry
upgrading, sustaining growth and promoting
domestic consumption. Its urban population is
expected to grow from 46% in 2009 to 73% by
20501, adding a projected 46 million middle class
households from 2010 to 20152.
With 2,711 hectares of land available for sale, our projects in Vietnam and China provide a robust development pipeline. Furthermore, with our ability to extract further value by undertaking selective development of commercial and residential real estate at choice sites, we believe that the business is poised for growth in the coming years. |
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1 United Nations World Urbanisation Prospects, The 2009 Revision
2 Boston Consulting Group: ‘Winning in Emerging-market Cities’, September 2010 |
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