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Innovation - the cornerstone of FCL's business approach
FROM expanding overseas, setting up of a full real estate investment trust (Reit) platform for all its asset classes, to pioneering the suburban mall concept in Singapore, innovation is at the heart of how Frasers Centrepoint Limited (FCL) approaches its business.
"This can be seen in all aspects of our business, from the way we deliver our development projects, to the way we grow our international businesses, right down to the way we look at the foundation of our business," says FCL group CEO Panote Sirivadhanabhakdi.
FCL's foray into international markets had started back in the 90s when there were no strong push factors in the domestic market nor peer pressure to do so. Yet, the impetus was clear, as Mr Sirivadhanabhakdi explains: "We are in the business of building a company that can deliver sustainable earnings, and we were convinced that diversifying geographically was a necessary step."
Taking the road less travelled back then, FCL chose to enter markets such as Australia and the UK - not because they were popular but because they were deep, stable and mature markets and, coupled with a strong regulatory environment, offers long-term business potential to FCL.
Today, Australia is a core market for FCL, comprising about a third of its S$25 billion total assets as of March 31. With its success in Australia, FCL is revving up its overseas strategy to replicate this success in other selected secondary markets. It will do so by leveraging its multi-segment competencies to shore up its investments in China, South-east Asia, and Europe.
"We are in a fortunate position where we have planted our seeds in a number of markets where we see long-term potential," Mr Sirivadhanabhakdi says. "Now we are focused on growing our investment in these markets."
Mr Sirivadhanabhakdi, 39, who oversees FCL's international business directly, was first appointed a board director in 2013 before taking over the reins as group CEO in October 2016.
Over the past two years, the group has made several acquisitions. In Europe, it has completed the acquisition of an 86.6 per cent stake in Geneba Properties. FCL has also been actively growing its presence in Thailand in recent years with the acquisition of a 40 per cent stake each in Golden Land Property Development and TICON Industrial Connection.
Now, the numbers are speaking for themselves. As of March 31, overseas assets accounted for over half of FCL's portfolio and contributed over 60 per cent of the group's profit before interest and tax (PBIT). Recurring income assets made up 70 per cent of FCL's S$24.6 billion asset portfolio as of end-2016 and contributed more than half of group PBIT.
"Our results in recent years have clearly validated our decision to diversify geographically with the ultimate aim of achieving sustainable earnings, while capturing opportunities across property cycles," says Mr Sirivadhanabhakdi.
Mr Sirivadhanabhakdi notes that there is no one-size-fits-all approach to entering new markets or expanding overseas, pointing out that FCL has gone in via joint ventures, development projects, hospitality management contracts, portfolio acquisitions, and stake acquisitions in listed entities. The asset classes FCL has ventured into are similarly diverse, representing the full suite of its capabilities that now span commercial, retail and industrial properties, as well as serviced apartments and hotels.
"Each market is unique, and we must be prepared to think out-of-the-box to find the best risk-reward options, and be open and willing to working with business partners towards mutually beneficial outcomes," he adds.
To support that growth momentum, maintaining strong financial discipline is critical. To that end, the group has been constantly looking at ways to diversify its sources of funding and optimise its capital.
FCL was one of the first real estate companies in Singapore to issue perpetual bonds and retail bonds; it was also one of the first real estate companies with a Reit platform for each of its four investment property asset classes, namely office, retail, industrial and hospitality.
That said, FCL's innovative approach is best epitomised in its project development, from conception to delivery, beginning with its first project, The Centrepoint, located in the heart of Orchard Road. The Centrepoint was one of the first modern malls in Singapore that redefined shopping experiences when it was completed in 1983.
Again in 1992, FCL redefined shopping experiences here with the launch of Northpoint, pioneering the suburban mall concept in Singapore. It was also the first in Singapore to introduce suburban mixed-use development integrated with the MRT station and bus interchange with the launch of Compass Point and Compass Heights. Fast forward to today, Northpoint will soon chalk up another "first" when Northpoint City, the first mall in Singapore with a Community Club, opens at the end of this year.
Mr Sirivadhanabhakdi points out that these developments are notable not only because they are the first-of-their-kind, but also because these developments make a real difference to the community. "It is about approaching such projects as an opportunity for place-making - the creation of places that offers opportunities for the community to come together, places that can contribute positively to the community's every-day life."
Another reflection of FCL's place-making approach can be seen in its multi-award winning Central Park in Sydney. This project is often cited as an urban rejuvenation and high density project that is done right.
Designed to be Australia's greenest and most self-sufficient mixed-use urban development, sustainability is a way of life at Central Park with an on-site central thermal tri-generation plant and an on-site water recycling plant. This was also where the project team identified the opportunity to implement precinct-wide energy infrastructure - an unprecedented initiative in Australia - which resulted in the launch of FCL's new embedded energy network business in Australia.
This demonstrates the motivation of FCL's staff across all levels to constantly explore new ways to perform their roles, and look for possibilities in new areas, Mr Sirivadhanabhakdi says. The group now employs close to 4,300 people, of which 75 per cent are based overseas. Its senior leaders also meet regularly to discuss mega trends, how the industry is being reshaped by such trends, and how the group can find opportunities in challenges to remain relevant.
FCL is certainly looking to harness the experiences, knowledge, and entrepreneurial spirit of its people for its latest joint-venture mixed use project in Thailand. One Bangkok is set to be Thailand's largest integrated district designed to bring together business, community and visitors, with an emphasis on green and sustainability principles.
"FCL has to constantly evolve as a business and taking an innovative approach to all that we do is a way of life. Building a team of people who are excited to be a part of FCL's growth and way of life will always be one of my top priorities," he adds.
- One Bangkok will be Thailand’s largest fully integrated district with direct links to the mass transit network. It will comprise next-generation office buildings, distinct retail and leisure precincts, luxury hotels, ultra-luxury residential towers, landscaped civic areas, and world-class art and culture facilities.
- The 38-storey premium Grade-A Frasers Tower has 663,000 sq ft of net lettable area and a three-storey retail podium.
- Slated to have over 400 retail outlets, Northpoint City will be the largest mall in northern Singapore. The integrated development will comprise 920-unit North Park Residences, a community club, a vibrant town plaza, and an integrated transport hub.
- The 143-unit Capri by Fraser, Berlin is strategically located in Scharrenstraße. It is designed to target the millennial traveller.
- When completed, Edmondson Town Centre will comprise 1,900 residential homes and apartments, a 40,000 sq m shopping and entertainment precinct, community facilities, commercial and public open spaces.
Add: 438 Alexandra Road, #21-00
Alexandra Point, Singapore 119958
Tel: 6276 4882