CapitaLand riding wave of disruption

TECHNOLOGY is rapidly changing the way people live, work and play, and thus how real estate is designed and managed. CapitaLand Limited is already taking the digital bull by the horns, with its sights trained on future-proofing its business. The group has leveraged digital tools and partnered with the disruptors to reach out to customers, embraced "smart" building technologies, and harnessed data to enhance shopper experiences at its malls.

Besides refreshing its existing properties to keep them relevant, the group is also targeting more integrated developments to derive greater synergies across the different asset classes.

"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.

The redevelopment of former IT mall Funan into a mixed-use complex, for instance, entails much crystal ball-gazing into the future. "We are taking this as an opportunity to leapfrog into the future, envisioning how the shopping mall of the future will look like three to five years from now," Mr Lim says.

To break new ground, the group is working closely with retailers that want to introduce new concepts, as well as technology partners to implement digital solutions. Beyond co-working spaces for a mobile workforce, the team is also exploring other concepts for the office component at Funan to offer companies a unique work environment. It will also offer co-living apartments for young professionals.

Another exciting project in the pipeline is the Golden Shoe Car Park redevelopment by CapitaLand Commercial Trust, CapitaLand and Mitsubishi Estate Co Ltd, which will integrate work spaces, serviced apartments, carpark lots, and a food centre.

Outside of Singapore, CapitaLand has a myriad of opportunities in curating new experiences in massive integrated projects in Chongqing, Shanghai and Suzhou.

Evidently, the astronomical surge in digital connectivity in the past decade is a double-edged sword. The proliferation of e-commerce and home-sharing sites are challenging retail malls and hospitality incumbents while a growing pool of digitally connected millennial workforce is increasingly influencing the way workspaces are designed.

On the other hand, the pervasiveness of social media and data analytics also allow companies to understand their customers better and reach out to more people. "Very soon, more than 50 per cent of the workforce will be millennials," Mr Lim says. "They are already a large part of our customer base. They are brought up in a different environment, whereby they are always connected. This shapes the way they make use of the space and interact with people."

To cater to the changing needs of office occupiers, CapitaLand has dipped its toes into co-working. It started a joint venture with Collective Works last June to open a 22,000 sq ft space at Capital Tower. It also partnered with China's UrWork to operate in two CapitaLand malls in China and inked a partnership with Vietnam's Toong early this year, which is operating in The Vista, CapitaLand's integrated development in Ho Chi Minh City. "Co-working became something of a phenomenon in the last five years and is progressively seeing more take-up as people become more comfortable with this arrangement," Mr Lim says.

In the area of accommodation, the group's serviced residence arm The Ascott Limited came up with its own co-living offering under the new brand, lyf, which will open first in Wu Tong Island Shenzhen and Dalian in China in 2018, and Farrer Park in Singapore in 2021.

Ascott has also partnered new economy leaders like Tujia, which is China's answer to Airbnb, and Fliggy (Alitrip). Besides investing S$67.7 million into Tujia, making its properties accessible to China's sizeable population via Tujia's platform, Ascott also formed a joint venture with Tujia to launch properties across China, branded as Tujia Somerset.

Mr Lim notes that tying up with these digital partners offers users a more seamless experience from online to offline. Digital tie-ups also facilitate that seamless experience for shoppers in its malls. The group works with restaurant booking platform Chope and ride-hailing application Grab, both of which can be accessed on the CapitaStar app through its Sparkle chatbot.

CapitaStar members, now totalling about 4.3 million globally and over 830,000 in Singapore, earn reward points, or STAR$®, when they shop and dine at, as well as travel to, CapitaLand's malls.

This loyalty programme also allows CapitaLand to harness the power of big data in retail. Insights glimpsed from the customers are aggregated and shared with retailers to help them curate the right mix of products and experiences in different malls.

CapitaLand has also stepped up its expansion of shopping mall networks since August 2016 through management contracts.

Mr Lim shares that scaling up in this asset-light manner allows the group to grow its recurring income stream while reaching out to more customers and offering them better benefits given the network effect and economies of scale. This will, in turn, help retailers raise their chance of success.

Much effort has also gone into making its buildings "smart" through the Internet of Things and sensors to gather data on operational efficiency and user behaviour. With the use of data predictive analytics on customers and performance of properties, Mr Lim finds that decision-making has become more "scientific" and precise.

All these initiatives underpin the belief that real estate remains relevant, notwithstanding the profound changes in the way people live, work and play, Mr Lim points out.

Besides refreshing its portfolio, CapitaLand is also on the lookout for more opportunities to grow its recurring income stream, maintaining its investment property portfolio within 70-80 per cent of the total balance sheet. This targeted range allows CapitaLand to adjust its portfolio over real estate cycles.

Mr Lim opines that increased connectivity is ultimately blurring the lines across asset classes and signalling the end of a single-purpose approach to real estate. "When we look at the landscape, we believe that with the capabilities that we have, we can build a global system," Mr Lim says. "We are looking at building a global platform with nodes in key gateway cities."

CURRENT PROJECTS

- Funan, Singapore: The former IT mall located right in the heart of Singapore's Civic & Cultural District is being redeveloped into an integrated development comprising offices, a 6-storey retail mall, and co-living apartments. About a quarter of tenants for the mall's net lettable area of about 324,000 sq ft have been confirmed, more than two years ahead of its opening in Q4 2019. The authorities have given in-principle approval for a fully sheltered underground connection to City Hall MRT station from the mall's basement.

- lyf Farrer Park Singapore: This co-living concept was unveiled by The Ascott Limited in November 2016, with a target to have 10,000 units under the lyf brand globally by 2020. So far, it has already secured three locations. They are the 112-unit lyf Wu Tong Island Shenzhen that will open in the first half of 2018; the 120-unit lyf DDA Dalian which is scheduled to open by end-2018; and the 240-unit lyf Farrer Park Singapore, which is slated to open in 2021.

- Golden Shoe Car Park, Singapore: A CapitaLand-led joint venture is redeveloping the Golden Shoe Car Park in Raffles Place at an estimated cost of S$1.82 billion. The 280m-tall integrated development will be among the tallest buildings in the CBD when it is completed in the first half of 2021. There will be Grade-A office space spanning 635,000 sq ft of net lettable area, a 299-unit serviced residence over eight storeys managed by CapitaLand's The Ascott Limited, five floors of carpark space and 12,000 sq ft of retail space.

- Toong at The Oxygen, Vietnam: As part of CapitaLand's efforts to drive the 'future of work', it has inked a partnership with Toong, Vietnam's largest co-working space operator. Through this partnership, Toong has opened its first co-working space in Ho Chi Minh City at The Oxygen mall. Situated in District Two, The Oxygen mall is located within the high-end residential development, The Vista, one of CapitaLand's nine residential developments in Vietnam.

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