Thriving in the disruptive age

MAJOR paradigm shifts are taking place in the real estate sector, which is clearly not immune to disruption. Technologies and the emergence of the millennials are already profoundly reframing how industry players think about real estate.

There are many ways disruption is impacting this sector. Offices are facing a growing pool of millennial work?ers and a rising gig economy that requires more flexible, functional workspaces; retail shops are challenged by e-commerce, while the role of real estate agents is increasingly confronted by the vast availability of online property records and listings.

The impact on the sector is long term and structural. But at the same time, disruption breeds opportunities. Recognising this, many industry players have tackled disruption head on.

CapitaLand, for one, works with disruptors and leverages digital tools to reach out to customers. It also utilises technology to make its buildings "smarter", and to harness data to know its customers better.

"As owners and managers of buildings, we cannot be passive landlords but need to be a lot more active in engaging our customers," says president and group CEO Lim Ming Yan.

"It's also about thinking from the customers' point of view on how they can move seamlessly from living to shopping to work," Mr Lim says.

Frasers Centrepoint Limited (FCL), has meanwhile, shown that the brick- and-mortar business can embrace innovation at its core, from the way it delivers development projects to how it grows its international businesses.

Both GuocoLand and CapitaLand are seeing integrated developments as the way to go in markets like China and Singapore.

But in light of limited opportunities in Singapore hampered by the number of sites available in state tenders, aggressive land bidding and toppish asset values, many property players prefer to place their bets on overseas markets.

Data from Real Capital Analytics (RCA), which tracks portfolio or standalone acquisitions of at least US$10 million, shows that overseas real estate investments by Singapore investors as a percentage of their total real estate investments jumped from 51 per cent in 2013 to 77 per cent in 2016, and inched up to 79 per cent during the first six months of this year.

Their total real estate investments globally grew 8.1 per cent in the first half of this year from a year-ago period to US$10.24 billion, with offices and apartments making up the bulk of the deals.

The more established players have, of course, benefited from a more resilient portfolio as they have diversified geographically and across asset classes much earlier.

Given FCL's success in Australia, a core market after Singapore which makes up a third of its S$25 billion total assets, the group now wants to replicate this success in selected secondary markets of China, South-east Asia, and Europe, says FCL group CEO Panote Sirivadhanabhakdi.

Homegrown developer Oxley Holdings, though a relatively young company compared to its bigger peers, is already flexing its muscles on the global stage with complex development projects. It has even become the first Singapore developer to enter Cyprus this year.

With a larger appetite and improved development capabilities, it is now eyeing large township projects in Myanmar's Yangon and potentially Vietnam through asset-light schemes, says Oxley's executive chairman and CEO Ching Chiat Kwong.

Of course, these companies are up against large local competitors in overseas markets. But it is in navigating uneven market terrains for new opportunities and keeping pace with technological changes that they can continue to thrive in this disruptive age.

Supplement editor: Lilian Ang Sub-editor: Lee Kim Siang Cover design: Gareth Chung Illustrations: Alice Ang, Gareth Chung Photographer: Yen Meng Jiin Advertising sales: Tom Yuen 9623 1128; Jaclyn Sim 8333 5665