Late last month one of China's largest state-run developers announced plans to invest $3.26 billion to develop hotels and homes in southern Malaysia, just across the border from Singapore. But lost among the press releases and scale models of development projects was a significant shift in the region's economic axis.
With its deal to set up a new mixed-use development just 11 minutes from the nearest Singapore light rail station in an area where the majority of buyers are said to be Singaporean consumers, Shanghai-based Greenland Group is signalling a new level of competition between Chinese and Singaporean real estate developers in Asia.
New Developer in Town
Before Greenland staked its claim with this project in Malaysia's Iskandar new economic zone, the biggest venture announced in the zone had been a planned US$2.52 mixed-use development by Singapore's CapitaLand and Singaporean government investment company Temasek Holdings. In addition to the Temasek deal announced in February last year, Singapore's sixth richest man, entrepreneur Peter Lim, has also reportedly invested US$1.16 billion in property projects in Iskandar.
Singapore, which dominates the finance industry in southeast Asia and is the region's wealthiest nation, has also traditionally been the dominant player in the region's biggest real estate markets.
Now, in addition to Greenland, at least four other Chinese developers have invested a total of more than $2.1 billion to buy land in the Iskandar region for development projects with estimated development values totaling several times the amount of the Temasek venture.
In many cases, these Chinese projects are aimed at marketing homes to Singaporean buyers, with Chinese developer Country Garden last year deploying a fleet of buses to locations across Singapore to carry prospective buyers to a tour of model units at its Iskandar project. At least one project in Iskandar reports that 74 percent of its home sales are to Singaporean buyers.
The Hinterland Fights Back
The importance of this shift needs to be considered against the recent history of the region, which saw wealthier nations such as Singapore looking at China as a resource that could be developed by its more experienced entrepreneurs.
In 2001 during his National Day address to the citizenry, then Singaporean Prime Minister Goh Chok Tong, urged his country's citizens to look to China as an unexplored 'hinterland' which companies from the resource-scarce city-state could develop to build their businesses.
Now 13 years later, real estate developers from what Singapore looked at as an undeveloped region are competing head to head with some of the island nation's largest corporations just a few minutes from the end of its public rail system.
Chinese Real Estate Companies Going Global
And the competition is not limited to Malaysia. Greenland specifically, has been among China's most prominent global investors in the last year, taking on projects in New York, London, Los Angeles, Sydney and Melbourne during that period.
Greenland is only the latest of China's real estate companies to use their well-developed bank accounts and extensive customer lists to exploit opportunities for real estate development in southeast Asia, but this is a playbook that should be familiar to observers of Singaporean business.
While Singapore has a strong reputation for free-market policies, many of its largest corporations have extensive government ties, and have often been able to win deals through their superior access to affordable credit through these government relationships.
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