SINGAPORE (Nikkei Markets) -- CapitaLand, Southeast Asia's biggest developer, remains confident about prospects in China even as economic growth slows and the trade war with the U.S. worsens.
Its China operations account for 42% of the Singapore-based company's business.
Although China's second-quarter growth came in below the forecast of many economists, demand for housing continues to be strong due to the many people still looking to buy their own homes or upgrade to a larger apartment, Lucas Loh, CapitaLand's president for China, said at a briefing on the company's quarterly results.
CapitaLand sold over 1,800 residential units in China during the three months ended June, more than double its sales in the same period a year ago. The second-quarter sales figure was also higher than that for the first three months of this year.
In the commercial segment, tenant sales at its 46 malls in China increased by 3.5% on year in the January-June period as shopper traffic grew 7.1%.
The continued urbanization and small size of Chinese apartments have in turn helped lift demand for space at malls where people can meet and socialize, Loh said. That's in contrast to countries like the U.S. where retailers are closing outlets amid competition from online players.
If growth slows to 6% or above 5%, "there will be a certain level of impact," Loh said. "But as a whole, our business in China will still continue to grow," he added.
CapitaLand, whose biggest shareholder is Singapore state investor Temasek Holdings, operates in more than 30 countries.
In June, the company completed the purchase of rival developer Ascendas-Singbridge from Temasek becoming one of Asia's largest diversified real estate groups with nearly 130 billion Singapore dollars ($93.9 billion) in property assets under management.
Chief Executive Officer Lee Chee Koon said in the statement accompanying the earnings that the enlarged group "with added asset classes and a new core market in India," would be better positioned to weather economic uncertainties given the cautious global outlook.
Besides China and India, CapitaLand's core markets include Vietnam and Singapore where the private residential property market has been restrained by government efforts to check prices.
The company blamed lower residential sales in Singapore in part for a 19.3% drop in revenue for the quarter ended June although Lee said the potential to rejuvenate some of its properties in the city-state over the next few years presented opportunities.
Net profit for the quarter fell 4.2% to S$579.8 million, damped by one-off costs related to the Ascendas-Singbridge acquisition.
Operating profit after tax and minority interests fell 8.4% to S$179.5 million, while net fair value gains rose 3.2% to S$562.0 million.
If the costs related to Ascendas-Singbridge were excluded, net earnings for the quarter would have risen by 1.7% as increased asset sales and revaluation gains offset lower contribution from residential projects, the company said.
OCBC Investment Research said the operating earnings were below expectations although it retained its "buy" rating on the stock.